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Outlook remains cloudy for U.S. 'fiscal cliff' deal

Source: Thomson Reuters Foundation - Wed, 12 Dec 2012 15:05 GMT
Author: Reuters
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* Public back and forth still limited to generalities

* Talks to avoid 'cliff' may have a long way to go

* Obama to meet with U.S. mayors

* Boehner to hold 10 a.m. EST/1500 GMT news conference

By Fred Barbash

WASHINGTON, Dec 12 (Reuters) - More public jousting in the "fiscal cliff" talks is expected from Democrats and Republicans on Wednesday in what has become a daily ritual of demanding more specific proposals to avert the steep tax hikes and budget cuts set for the end of the year.

On Tuesday the White House and House of Representatives Speaker John Boehner traded offers still couched in broad and familiar terms that neither side found sufficiently detailed.

Boehner was expected to hold a news conference at 10 a.m. (1500 GMT) on Wednesday.

At noon (1700 GMT), Obama planned to discuss the economy, deficit, taxes and the fiscal cliff with bipartisan group of mayors and community leaders, although that event was private.

If the public back and forth between Boehner and President Barack Obama reflects what's happening behind the scenes, negotiations to avoid the cliff have a long way to go in the short time remaining in 2012.

Obama and Boehner each have proposed cutting deficits by more than ${esc.dollar}4 trillion in the next 10 years as a way of averting the cliff, but they differ on how to get there. Economists have warned that failure to strike a deal could send the economy back into a recession.

On Tuesday Boehner rejected what the White House viewed as a concession, shrinking the proportion of deficit reduction to come from revenue from ${esc.dollar}1.6 trillion over 10 years to ${esc.dollar}1.4 trillion. Boehner has called for ${esc.dollar}800 billion in revenue through tax reform.

The White House has also repeated a proposal it made in February to consider reductions in corporate tax rates, a source familiar with the talks told Reuters.

That proposition is considered relatively uncontroversial compared to such politically sensitive matters as cutting entitlement programs such as Medicare, the government health insurance program for the elderly.

On Wednesday, House Democratic Leader Nancy Pelosi said Democrats in the House objected to raising the age when seniors become eligible for Medicare, which now stands at 65, as a way to cut government spending.

"Raising the retirement age does not get you that much money, so you're doing a bad thing when it comes to seniors, and you're not achieving your goal," she told CBS, adding that she was optimistic that a deal could get done before Congress adjourns for Christmas.

Pelosi and Senate Majority Leader Harry Reid pointed to Boehner to make concessions on revenues.

"To this point, there hasn't been a lot of progress, and I'm very, very disappointed," Reid said on the Senate floor Wednesday morning.

'PLAYING TO THE MEDIA'

White House press secretary Jay Carney, commenting Tuesday on suggestions of vagueness in Obama's dealings with Boehner, responded by holding up copies of prior administration budget proposals that include, among other things, corporate tax reductions, and comparing them to the two-page offer that Boehner has sent to the White House.

A senior Republican fiscal hawk, Senator Tom Coburn of Oklahoma, faulted both sides for playing politics.

"There's no leadership in Washington either at the presidential level or the leadership level in Congress," Coburn said on CNN Tuesday night. "People are playing to the media rather than playing to the future of the country."

Republican Senator Rand Paul of Kentucky suggested in a Fox News interview late on Tuesday that, to get things moving, the House vote on the stickiest issue - whether to extend expiring tax cuts to all taxpayers except high-earners, as Democrats want, or to everyone, as Boehner wants.

Republicans would simply vote "present" on the Democratic plan, he said, allowing it to pass.

Let the Democrats approve a tax increase on upper-income taxpayers, Boehner said.

But "do it with their votes, not our votes," he said. "Republicans vote present in the House. Democrats can pass the tax increase with only Democrat votes and then the Democrats are the parties of high taxes and the Republicans are the party of lower taxes. And I think that's the way it should be."

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