* Pace of talks quickens as Jan. 1 deadline nears
* White House says Obama believes deal can be reached
* Republican Corker again calls for extending most tax rates
By Richard Cowan
WASHINGTON, Dec 10 The White House and House of
Representatives Speaker John Boehner's office held more
negotiations on Monday on ways to break the "fiscal cliff"
stalemate, although neither side showed any public signs that
they were ready to give ground.
The talks gained urgency after Republican Boehner met at the
White House with President Barack Obama on Sunday, raising hopes
of progress in averting the onset of tax increases and spending
cuts that kicks in on Jan. 1 unless Congress intervenes.
But while striking a more conciliatory tone, both sides kept
to a familiar script in the weeks-long standoff. Obama renewed
his call for higher tax rates for the richest Americans, which
most Republicans oppose, while Republican leaders urged Obama to
submit a new offer with specific spending cuts he would back.
Economists say going over the fiscal cliff could throw the
U.S. economy back into a recession.
On a road trip to Michigan to drum up support for his
stance, Obama said he was willing to compromise on some things
but not on his demand that Republicans support an increase in
tax rates for the wealthiest 2 percent of Americans.
"What you need is a package that keeps taxes where they are
for middle-class families, we make some tough spending cuts on
things that we don't need, and then we ask the wealthiest
Americans to pay a slightly higher tax rate, and that's a
principle I won't compromise on," Obama said during a visit to
an auto plant in Redford, Michigan.
Boehner spokesman Michael Steel said Republicans were still
waiting for the president to make a new offer that identifies
the spending cuts he will make in the deficit-reduction
"The Republican offer made last week remains the Republican
offer," Steel said, adding the two sides were holding
staff-level talks on Monday.
Boehner and the House Republican leadership submitted their
terms for a deal to the White House last week, after Obama
presented his opening proposal. Both sides seek to cut budget
deficits by more than $4 trillion over the next 10 years but
differ drastically on how to get there.
Boehner and Republicans oppose letting any tax rates
increase and prefer to find new revenues by closing loopholes
and limiting deductions. Republicans also want deeper spending
cuts than Obama has offered in entitlements like the Medicare
and Medicaid healthcare programs.
Democrats have insisted that tax rates for the richest must
be nailed down before negotiating further on how to proceed with
tax reform efforts or new spending cuts in entitlement programs.
'A DEAL IS POSSIBLE'
"I can only say that the president believes that a deal is
possible," White House spokesman Jay Carney told reporters on
the flight to Michigan. "But it requires acceptance and
acknowledgement in a concrete way by Republicans that the top 2
percent will see an increase in their rates."
Financial markets have calmed recently after a series of
wild swings, when nearly every utterance from a politician about
the looming budget crisis caused volatility in stock prices.
Polling shows most Americans would blame Republicans if the
country goes over the cliff, and pressure has been building from
some Republicans for Boehner to get an agreement quickly, even
if it means tax hikes on the wealthiest.
Republican Senator Bob Corker of Tennessee called for a
quick deal with the White House to allow an extension of the
lower tax rates that have been in place for about a decade,
except for the top two rates that Obama wants to raise.
"Right now there is no question in my mind the president has
the slight upper hand in the negotiations," Corker said on CNBC
He said there was support among Senate Republicans for
taking that step so the fiscal cliff negotiations could then
shift to focusing on how to restrain the growing costs of
Medicare and other entitlement programs.
"If you did it this week (agree to raising tax rates on the
richest) you'd have the rest of this month to have the focus
totally on entitlements," said Corker, who has a record of
reaching out to Democrats on major bills.
More conservative Senate Republicans, most notably Senator
Tom Coburn of Oklahoma, also have signaled a willingness to let
tax rates rise on higher-income groups.
Erskine Bowles, co-chairman of the so-called Bowles-Simpson
deficit reduction commission, said he thought chances were
improving for a deal.
"I think the atmospherics are getting so much better. We
have kind of gotten out of Kabuki theater and gone to dancing
the tango," Bowles told CNBC on Monday. "Any time you start to
tango you've got a chance."
Bowles said he did not expect the president to give in on
his demand that taxes rise for the top 2 percent of earners.
"I would almost guarantee that rates are going to go up for
people in the top 2 percent," he said.
U.S. stocks edged higher on Monday but moves remained muted
as investors looked for any signs of movement on the fiscal
The S&P 500 index has nearly retraced the 5.3 percent slide
it suffered in the first seven sessions after the Nov. 6
"The sentiment has definitely changed," said Andrew
Wilkinson, chief economic strategist at Miller Tabak & Co in New
York. "The market has become somewhat desensitized to headlines
out of Washington because the fear of the economy hitting a wall
in 2013 if we don't get a deal done has diminished."