Obama and Boehner met for about 45 minutes at the White House Monday with two weeks remaining to avert more than $600 billion in spending cuts and tax increases set to start in January. Treasury Secretary Timothy Geithner also attended the meeting, according to a Treasury Department statement. Obama is seeking an income-tax increase for top earners while Boehner wants to cut spending on entitlement programs.
Switching the inflation yardstick to the so-called chained consumer price index would reduce Social Security cost-of-living benefit increases and generate fresh revenue because it also would reset income-tax brackets. Some Democrats in Congress have said they're willing to make that change.
"We want to preserve these programs for the long run," Democratic Sen. Tom Carper of Delaware said last week. "We need a great compromise; Democrats need to compromise on entitlement reform that doesn't savage older people or poor people."
White House spokesman Jay Carney declined to comment on the talks.
Still, Senate Majority Leader Harry Reid has declared Social Security off the table in any deal to avert the so-called fiscal cliff of tax increases and spending cuts.
Other Democratic leaders including Sen. Dick Durbin of Illinois haven't ruled out the idea, without endorsing it. Obama also didn't close the door in an interview earlier this month with Bloomberg News.
The key for Democrats is whether a change can be made in a way that would protect low-income and other vulnerable groups of senior citizens, said the two people familiar with the talks, who spoke on condition of anonymity to discuss the negotiations.
Late last week, Obama rejected a Dec. 14 offer by Boehner to raise tax rates on household income exceeding $1 million a year and lift the federal debt ceiling in exchange for containing entitlement program costs.
While Obama wants higher rates for income exceeding $250,000, Boehner's offer marked movement because he has opposed increasing tax rates for any income level.
Some Democratic Senate leaders had indicated last week that once Boehner showed a willingness to raise income tax rates for top earners, Democrats would be open to negotiating changes in entitlement programs.
"We're waiting for them to go to the top rate and that opens the door to everything," said Sen. Chuck Schumer of New York, the Senate's third-ranking Democrat, said last week.
Boehner was invited Sunday to Monday's meeting, which was arranged by staff members for the two men, according to a Republican congressional aide who requested anonymity to discuss plans for the private talks.
It was their third face-to-face meeting on the budget this month, after one on Dec. 9 and another on Dec. 13.
In his Dec. 14 offer, Boehner also said he would accept $1 trillion in revenue, up from $800 billion, according to a person familiar with the talks who requested anonymity when discussing the negotiations. That person said Boehner's offer would pair the revenue increase with equal cuts to entitlement programs.
The speaker had earlier said he would consider raising revenue only by curtailing tax breaks or capping deductions for top earners. To cut spending on entitlements, some Republicans have advocated raising the Medicare eligibility age or raising premiums or co-payments for wealthier Medicare recipients, known as means testing.
Obama last week reduced his demand for new revenue to $1.4 trillion from $1.6 trillion.
The anti-tax Club for Growth urged Boehner Monday not to agree to a debt-limit increase.
"Raising the debt ceiling would give away one of the best tools the Republicans have in their arsenal to force real reform," the organization's President Chris Chocola said in an emailed statement.
Obama is pressing for unilateral authority to raise the federal debt ceiling, while Boehner's latest offer stipulates that "any debt limit increase would require cuts and reforms of a greater amount," said Boehner spokesman Michael Steel. Cuts of $1 trillion, as Boehner is seeking, would be about enough to cover a one-year debt limit increase.
The Congressional Budget Office has said that a failure to avert the tax increases and spending cuts would probably lead to a recession in the first half of 2013. Republicans say their leverage to force spending cuts could increase in 2013 as the need approaches to increase the federal debt limit as early as mid-February.
The congressional Joint Committee on Taxation has estimated that letting the tax cuts expire for annual income exceeding $1 million would generate $366 billion less revenue over a decade than the $829 billion that Obama's plan would collect by setting the annual threshold at $250,000.
Lawmakers have said that the two sides must reach agreement on a framework by early this week to have enough time to advance legislation through Congress before the Christmas holiday. If Congress doesn't act, tax rates for income at all levels would rise next month, along with taxes on estates, capital gains and dividends.
Senate Republicans are discussing a legislative strategy for extending the tax cuts for income up to $250,000 a year. Under the scenario, the House would vote on a measure that would enact that policy as well as a separate bill that would continue the tax cuts for all income. The Senate then would approve the first bill and send it to Obama for his signature.
Democrats are banking on the idea that the public would blame Republicans if no deal is reached by year's end.
"If they don't come to a compromise, all the ensuing problems on Jan. 1, almost all of them, will really be on their shoulders, and I think the public knows that," Schumer, the chamber's third-ranking Democrat, said of Republicans in a Dec. 13 interview.
Sixty-five percent of those polled say Obama's Nov. 6 election victory gave him a mandate on his proposal to raise tax rates for top earners, according to a Bloomberg National Poll of 1,000 adults conducted Dec. 7-10.
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