* Activity in private quickens as Jan. 1 deadline nears
* White House says Obama believes deal can be reached
* Republican Portman calls for give and take
* Financial markets less concerned about political process
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 stalemate over the
"fiscal cliff," steep tax hikes and budget cuts set to start
kicking in next month.
Neither side gave any public signs that they were ready to
give ground. And a House Republican leadership aide said, "There
is no deal or anything like it" on resolving fiscal cliff
On Capitol Hill, however, there were indications that
preparations were under way for quick legislative consideration
of a deal if one is reached soon.
The most discussed scenario - which remains nothing more
substantial than that - has Democrats getting the tax increases
on high earners they favor in exchange for significant
concessions that would help reduce the costs of Medicare, the
government healthcare program for seniors.
Democrats and Republicans next year would also work together
on comprehensive tax reform aimed at bringing in more revenues
to the government, in part by eliminating some tax breaks.
As similar deficit reduction talks between Boehner and
President Barack Obama in 2011 showed, negotiations that seem
promising one day can fall apart the next.
And if Obama and Boehner were to tentatively agree on such a
package, the two would have to sell the plan to Democratic and
Republican lawmakers in the Senate and House.
According to one senior Democratic aide, the two sides also
are talking about including an increase in U.S. borrowing
authority, which Obama wants before Congress wraps up for the
Without such authority, the Treasury is likely to hit its
$16.4 trillion borrowing limit by year's end and run out of
creative steps to stave off default as soon as mid-February.
Another sign of potential progress was a conciliatory
opinion article published late Monday in The Wall Street Journal
by Republican Senator Rob Portman of Ohio.
Portman, a former top budget official in the administration
of President George W. Bush, wrote that while he disagrees with
Obama's desire to raise taxes on high earners, "negotiations
require give and take."
Portman urged Obama to offer up proposals to cut
entitlements such as Medicare and reform the tax code,
suggesting that if he did, Republicans would be "eager to work
with him" to avert the cliff.
Portman joins a growing chorus of Republicans, particularly
in the Senate, who have signaled flexibility.
The talks gained urgency after Republican Boehner met at the
White House with Obama on Sunday, raising hopes of progress in
averting the cliff.
But while striking a more conciliatory tone, both sides kept
to a familiar public 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
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.
Early on Monday, 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
"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 Medicare and
Medicaid, the healthcare program for the poor and disabled.
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."
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.
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."