* 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 (Reuters) – 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, but Republicans said they were still seeking a new
offer from President Barack Obama.
With time running out to avert the onset of tax increases
and spending cuts that kicks in on Jan. 1 unless Congress acts,
the pace of talks has begun to pick up although neither side
gave ground in public.
Boehner met with Obama on Sunday, raising hopes of progress
in talks to avert the fiscal cliff that economists say could
send the fragile economy back into a recession.
A spokesman for Obama said the lines of communication were
still open with Republicans in the cliff talks and Obama
believed the two sides could reach a deal.
“The president does believe that we can reach an agreement,”
spokesman Jay Carney told reporters traveling with the president
in Michigan. Neither side offered details of Sunday’s
face-to-face talks.
“We, broadly speaking, continue to engage in this process
with important players and stakeholders,” Carney said.
Boehner spokesman Michael Steel said Republicans were still
waiting for the president to identify the spending cuts he will
make in the deficit-reduction negotiations. “The Republican
offer made last week remains the Republican offer,” Steel said.
The two sides were holding staff-level talks on Monday, he said.
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.
Boehner and the House 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.
Obama wants to let tax rates rise for the wealthiest 2
percent of Americans, while Boehner and Republicans oppose
letting any 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, while Obama wants to raise more revenue
with tax increases and to boost some spending to spur the
sluggish economy.
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.
OBAMA HITS THE ROAD
Obama was heading on Monday to an auto plant in Michigan to
press his case for tax hikes on the wealthiest Americans as part
of his continuing push for public support in the cliff talks.
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
on Monday.
He said there was support among Senate Republicans for
taking that step so that 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.”
He said he did not expect the president to budget 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 rose on Monday but moves remained muted as
investors looked for any signs of movement on the fiscal cliff
front.
The S&P; 500 index has nearly retraced the 5.3 percent slide
it suffered in the first seven sessions after the Nov. 6
presidential election.
“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.”
