WASHINGTON (AP) — President Barack Obama and House Speaker John Boehner met at the White House on Monday in hopes of continuing to make progress on a plan to deal with the "fiscal cliff."
The meeting came after Boehner on Friday offered $1 trillion in higher tax revenue over 10 years and an increase in the top tax rate on people making more than $1 million a year. The House speaker is also offering a large enough extension in the government's borrowing cap to fund the government for one year before the issue must be revisited — conditioned on President Barack Obama's agreeing to the $1 trillion in cuts.
More progress was made in staff negotiations over the weekend. The two negotiators are running out of time if they hope to make an agreement and get it passed through Congress before the cliff strikes at the beginning of January when an economically toxic mix of huge tax increases and slashing cuts to the Pentagon and other federal agencies begins to take effect Jan. 1.
"The president and the speaker are meeting at the White House to continue their discussions about the fiscal cliff and balanced deficit reduction," said Boehner spokesman Michael Steel. The two met for about 45 minutes, officials said.
Given the pressing timetable, the two men are hoping to set the broad parameters of an agreement while taking care of urgent business like extending tax cuts for most earners, preventing sharp cuts in Medicare physician payments, and making sure millions of taxpayers don't get struck by the alternative minimum tax.
The idea is that other steps, like overhauling the tax code and additional cuts to popular programs like Medicare would take more time and be fleshed out next year.
Obama is also pushing extending jobless benefits for the long-term unemployed and wants an extension of the two percentage point payroll tax cut or something like it.
Boehner's latest offer broke a long impasse. It calls for about $450 billion in revenue raised in part from increasing the top rate on million-dollar-plus income from 35 percent to the Clinton-era rate of 39.6 percent.
The additional revenue required to meet the $1 trillion target would be collected through a rewrite of the tax code next year and by slowing the inflation adjustments made to tax brackets.
In return, Boehner is asking for $1 trillion in spending cuts from government benefit programs like Medicare. Those cuts would defer most of a painful set of across-the-board spending cuts set to slash many domestic programs and the Pentagon budget by 8-9 percent, starting in January.
Boehner's proposal was described Sunday by officials familiar with it. They required anonymity because of the sensitivity of the talks.
Boehner also continues to press for a less generous inflation adjustment for Social Security benefits, a move endorsed by many budget hawks. Obama and Democrats on last year's deficit "supercommittee" endorsed the idea in offers made last year, but they're more reluctant now.
The new inflation adjustment would also raise about $70 billion over a decade in new revenues because tax brackets would rise more slowly for inflation, driving people more quickly into higher tax brackets.
The increased optimism come as time is running out before the adjournment of Congress. Tax rates on all workers go up in January, and $109 billion worth of across-the-board spending cuts begin to take effect then as well. Taken together with the expiration of extended jobless benefits and a 2-percentage-point break in Social Security payroll taxes, the combination of austerity steps threatens to send the economy back into recession.