President Barack Obama and House Speaker John Boehner are in "spitting distance" of getting a "fiscal cliff" deal done, Silver Lake Partners Co-Founder Glenn Hutchins told CNBC on Wednesday, which he added is needed to effect a "real recovery".
Although both sides appear to be digging in their heels on what is acceptable in a final deal, compromise is necessary to boost the U.S. economy, Hutchins said on CNBC's "Squawk Box".
"Just get in a room. We know you're going to get in a zone of discomfort, you're going to have to hold your nose a little bit on the last trade you do," private equity leader Hutchins implored. "But that's where you get your deal done."
Hutchins appeared with Evercore Partners CEO Ralph Schlosstein, who took issue with the idea of a "Plan B" if negotiations fail. Boehner alternate plan offers $1 trillion in higher tax revenues, but will only allow marginal tax rates to rise on people making more than $1 million per year.
That differs widely from the White House's original plan to hike taxes on those making $250,000 a year, or the $400,000 threshold put forth in the latest counter-offer.
"Whether the 'Plan B' is at a million dollars or the bill that passed the Senate at $250,000, it doesn't do what needs to be done," Schlosstein said. He added that a "Plan B" approach only deals with the tax issue, not the mandatory spending cuts in the new year or the looming decision on whether to raise the debt ceiling.
Schlosstein and Hutchins — who worked in the Jimmy Carter and Bill Clinton administrations, respectively — agree that Obama and Boehner are really close with their proposals to avoid the cliff. (Read more: Just How Close Are They?)
"I think it's absolutely vital to get a transaction done," said Hutchins, who co-founded Silver Lake Partners in 1999, and is a member of the Fix the Debt campaign. "It's necessary to begin the process of real recovery in our economy."
Although Republicans do not consider past spending cuts part of the mix in the current negotiations. Schlosstein and Hutchins said Congressional leaders are moving in the right direction on a number of other issues, including corporate and individual tax reforms, as well as long-term overhauls of the nation's entitlement programs.
Schlosstein acknowledged that entitlements are the toughest part because, he said, "Both parties have chosen a path of not paying for all the government they want to have."
—By CNBC's Matthew J. Belvedere; Follow him on Twitter @Matt_SquawkCNBC