Obama says he'll do what it takes to avoid cliff

By DAVID ESPO
AP Special Correspondent

WASHINGTON (AP) — The White House and a key congressional Democrat hinted at fresh concessions on taxes and cuts to Medicare and other government benefit programs Wednesday as bargaining with Republicans lurched ahead to avoid the year-end "fiscal cliff" that threatens to send the economy into a tailspin.

Increasing numbers of rank-and-file Republicans also said they were ready to give ground, a boost for House Speaker John Boehner and other party leaders who say they will agree to higher tax revenues as part of a deal if it also curbs benefit programs as a way to rein in federal deficits.

"I'll go anywhere and I'll do whatever it takes to get this done," President Barack Obama said as he sought to build pressure on Republicans to accept his terms — a swift renewal of expiring tax cuts for all but the highest income earners. "It's too important for Washington to screw this up," he declared.

For all the talk, there was no sign of tangible progress on an issue that marks a first test for divided government since elections that assured Obama a second term in the White House while renewing Republican control in the House.

"It's time for the president and Democrats to get serious about the spending problem that our country has," Boehner said at a news conference in the Capitol. He, like Obama, expressed optimism that a deal could be reached.

At the same time, he publicly disagreed with one GOP lawmaker, Rep. Tom Cole of Oklahoma, who said he was ready to go along with Obama's plan to renew most but not all of the expiring income tax cuts. "It'll hurt the economy" to raise rates for anyone, said Boehner.

Separately, at a closed-door meeting with the rank and file, the speaker told fellow Republicans they are on solid political ground in refusing to let tax rates rise. He circulated polling data showing the public favors closing loopholes to raise revenue far more than it supports raising rates on incomes over $250,000.

There were no face-to-face talks between the administration and lawmakers during the day, although the White House is dispatching Treasury Secretary Tim Geithner and top legislative aide Rob Nabors to a series of sessions with congressional leaders on Thursday.

On Wednesday, a group of corporate CEOs pushing for a deal met separately with top Democratic and Republican leaders in the House, joined by Erskine Bowles, who was co-chairman of a deficit commission Obama appointed earlier in his term.

Speaking to reporters before a session with business leaders, House Democratic leader Nancy Pelosi of California said the bargaining ought to begin where deficit talks between Obama and Boehner broke down 18 months ago "and go from there to reach an agreement."

She didn't say so, but at the time, the two men were exchanging offers that called for at least $250 billion in cuts from Medicare over a decade, and another $100 billion from Medicaid and other federal health programs. Among the changes under discussion — with Obama's approval — was a gradual increase in the eligibility age for Medicare from 65 to 67, as well as higher fees for beneficiaries.

Also on the table at the time was a plan to curtail future cost-of-living increases for Social Security and other benefit programs.

Those negotiations faltered in a hail of recriminations after the president upped his demand for additional tax revenue and conservatives balked. At the same time liberals were objecting to savings from Medicare and Social Security.

Now, more than a year and one election later, Obama has said repeatedly he is open to alternatives to his current proposal to raise additional tax revenue. But he also says he will refuse to sign legislation that extends the current top rates on incomes over $200,000 for individuals and $250,000 for couples.

Instead, he is pushing Congress to renew expiring tax cuts for all income below those levels as an interim measure — an offer Boehner and Republicans generally say is unacceptable because it would mean higher taxes on small business owners.

Bowles said during the day that Obama might be willing to back off his demand that the top rate revert all the way from 35 percent to 39.6 percent, where it was a decade ago before tax cuts sought by then-President George W. Bush took effect.

At the White House, spokesman Jay Carney sidestepped questions. "If I told you how much flexibility the president had, it would eliminate his flexibility," he said.

He noted that Obama has said he will listen to alternatives, but the spokesman said, "The most basic, simplest, most efficient way to achieve that revenue target is by returning the rates for top earners back to those that were in place in the Clinton era," when the top rate on personal income was 39.6 percent.

The goal of the talks is to produce a long-term deficit-cutting deal that will allow the cancellation of tax increases and spending cuts scheduled for the end of the year that numerous economists say threaten a new recession.

While the obstacles are numerous, there are other political imperatives pushing the two sides toward an agreement.

Unemployment benefits expire for some of the long-term jobless at the end of the year. Additionally the government is expected to need an increase in borrowing authority early next year or face the possibility of a default. Any agreement on that is expected to raise the current $16.4 trillion level.

Obama wrapped up the day by meeting with CEOs from about a dozen corporations, many of whom came away optimistic that an agreement could be reached that would help the economy.

"They feel like this can be done if there is a willingness on the other side to get in a room and do it," said Arne Sorenson, Marriott's president and CEO, who called Obama's approach "resoundingly reasonable."

Sorenson said he urged the president and his team to "do as much as you possibly can now. Don't just talk about down payments, small down payments that leave the uncertainty hanging out over 2013. Because I think the uncertainty would be a threat to the economy."

Associated Press writers Andrew Taylor, Jim Kuhnhenn and Ken Thomas contributed to this report.

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