‘Cliff’ Plans Exchanged; Reid Says Deal Unlikely Before Christmas!

CNBC.com with Wires
Senate Majority Leader Harry Reid, D-Nev., and Sen. Barbara Boxer, D-Calif., make their way to the senate luncheons in the Capitol.
Tom Williams | CQ Roll Call | Getty Images

House Speaker John Boehner's office said Tuesday that Republicans have made a counterproposal in "fiscal cliff" talks with the White House. Word of the offer came after Senate Majority Leader Harry Reid said it will be hard to reach a deal before Christmas.

Officials said President Barack Obama and Boehner had exchanged at least partial proposals in the past two days, although details were sparse and evidence of significant progress scarcer still. Obama and Boehner spoke by phone Tuesday after exchanging proposals.

Earlier, Reid said Democrats aren't going to make an offer on spending cuts. "Until we hear something from Republicans, there's nothing to draft," Reid told reporters in the Capitol, referring to writing legislation to implement a deal.

"It's going to be extremely difficult to get it done before Christmas."

The Nevada Democrat made his comments after House Speaker John Boehner accused President Barack Obama of dragging his feet in "fiscal cliff" negotiations.

"Let's be honest. We're broke. The plan we offered is consistent with the president's call for a balanced approach," Boehner said. "We're still waiting for the White House to identify what spending cuts the president is willing to make as part of the balanced approach that he promised the American people. Where are the president's spending cuts?"

The stock market was taking Tuesday's developments in stride. (Read More: Stocks Off Highs on Reid's 'Cliff' Remarks.)

Rebutting Boehner moments after he made his comments, House Minority Leader Nancy Pelosi said Obama and Democrats have in fact identified spending cuts they can support as part of a balanced plan to avert a "fiscal cliff" that threatens to send the economy into another recession.

In remarks on the floor of the House, Pelosi said Republicans should permit a vote on Obama's plan to let tax cuts expire at upper incomes, while keeping them in place for the middle class. She predicted the legislation would pass.

"The irony of this is that the White House offer had very specific cuts, the GOP counteroffer had almost none," tweeted the president's communications director, Dan Pfeiffer. White House aides circulated a summary pointing to more than $300 billion in proposed Medicare savings that are included in Obama's budget, as well as another $250 billion in non-health benefit programs.

Rep. Chris Van Hollen, ranking member of the House Budget Committee, told CNBC that while there are still a number of hurdles to overcome, he believes there's a better than 50 percent chance an agreement will be reached by Dec. 31.

"The lines of communication are open, many of our Republican colleagues recognize the strategy they had been pursuing isn't working," the Maryland Democrat said. "And the president also has been very clear he's been willing to make some compromises and tough decisions to reach an agreement."

The chiefs of more than a dozen major corporations, meanwhile, sent a letter to Obama urging both sides to compromise.

"We pledge our active support for a compromise that includes comprehensive and meaningful tax and entitlement reforms that result in market-credible spending reductions and revenue growth," the letter said. Signers included W. James McNerney Jr. of Boeing and John Engler of the Business Rountable.

The day's events underscored the difficulty confronting the White House and congressional leaders as they struggle to avert across-the-board tax increases and spending cuts in government programs that are scheduled to take effect at the turn of the year. Economists say the combination could send the economy into recession.

Fighting Back Fiscal Cliff Stalemate
Fighting Back Fiscal Cliff Stalemate

"The longer the White House slow-walks this process the closer our economy gets to the fiscal cliff," said Boehner.

Earlier, Senate Republican leader Mitch McConnell was somewhat more critical.

"The president seems to think that if all he talks about are taxes, and that's all reporters write about, somehow the rest of us will magically forget that government spending is completely out of control and that he himself has been insisting on balance," he said on the Senate floor.

He highlighted several government programs as examples of what he said was wasteful spending.

"A few weeks ago, Senator (Tom) Coburn issued a study that showed taxpayers are funding Moroccan pottery classes, promoting shampoo and other beauty products for cats and dogs and a video game that allows them to relive prom night," McConnell said. "Get this: Taxpayers also just spent $325,000 on a robotic squirrel named RoboSquirrel."

The two sides have presented rival initial offers in the cliff negotiations.

Obama's plan would raise $1.6 trillion in revenue over 10 years, in part by raising tax rates on incomes over $200,000 for individuals and $250,000 for couples. He has recommended $400 billion in spending cuts over a decade.

Norquist: Fiscal Cliff Is a Made-Up Deadline
Norquist: Fiscal Cliff Is a Made-Up Deadline

He also is seeking extension of the Social Security payroll tax, cut due to expire on Jan. 1, a continuation in long-term unemployment benefits and steps to help hard-pressed homeowners and doctors who treat Medicare patients.

The White House summary noted that Obama last year signed legislation to cut more than $1 trillion from government programs over a decade, and was proposing $600 billion in additional savings from benefit programs.

It also noted that the health care law that he signed into law showed savings of $100 billion. Much or all of that funding came from Medicare, even though Obama's aides insisted during his successful campaign for re-election that he had not made any cuts in it.

Boehner's plan, in addition to calling for $800 billion in new revenue, envisions $600 billion in savings over a decade from Medicare, Medicaid and other government health programs as well as $300 billion from other benefit programs and another $300 billion from other domestic programs.

It would trim annual increases in Social Security payments to beneficiaries, and it calls for gradually raising the eligibility age for Medicare from 65 to 67, beginning in a decade.

CNBC's Eamon Javers contributed to this story.