Obama and Boehner Resume US Fiscal Cliff Talks


A handful of top Republicans are giving up their opposition to higher tax rates on the rich, signalling possible progress in the fiscal cliff negotiations and adding pressure to conservatives in the House of Representatives.

The hint at progress came as the White House and the office of House Speaker John Boehner announced they had met on Sunday to discuss the fiscal cliff and that lines of communication remained open. The parties declined to offer more detail.

Bob Corker, a senior Republican senator from Tennessee, said he believed that agreeing to Barack Obama's demand for an increase in tax rates from 35 per cent to 39.6 per cent for the wealthiest Americans was "the best route for us to take".

The comments come as Capitol Hill approaches a Christmas without much merriment, with some staffers being told to expect to be at work on December 24 with little prospect of a deal taking shape sooner.

For now, there have been no signs of panic in the market, but that stability could begin to be tested by the end of this week if there are no concrete signs of progress.

The US president is continuing his public campaign in favor of a deal that raises tax rates on the rich to the public with a trip planned for Monday to a Daimler plant in Michigan, where he is expected to call for a "balanced" compromise.

If Congress and the administration fail to reach a deal, tax rates would increase for all US citizens and polls show the majority of the public would blame Republicans for the fallout, putting them in a no-win situation.

"There is a growing group of folks that are looking at this and realizing that we don't have a lot of cards as it relates to the tax issue, before year-end. We have one house, that's it," Mr Corker said on Fox News Sunday.

Another influential Republican in the Senate, Tom Coburn from Oklahoma, reiterated his willingness to vote for some tax rate increases on the wealthy if Democrats agreed to put "significant entitlement reform" on the table.

"Everybody in this country will have to participate in some discomfort if we're going to get out of this hole," he said on ABC's This Week.

The White House and Congressional leaders are embarking on high-stakes talks to avoid a fiscal cliff

Democratic leaders in Congress, who argue that the party has already agreed to cutbacks in Medicare and hundreds of billions of dollars in cuts to government spending in previous negotiations, have said they are not prepared to budge until they have a deal on tax increases.

While the remarks from some key Republicans in the Senate will be welcomed at the White House, they do not necessarily shift the contours of the deadlock in Washington, where Mr Obama's biggest obstacle to a deal lies in the lower chamber of Congress, where he is negotiating with Mr Boehner.

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Jeb Hensarling, the conservative congressman who represents the most staunchly anti-tax group of lawmakers on Capitol Hill, on Sunday accused Mr Obama of pulling a "bait-and-switch" by initially insisting on increased revenues through closing tax loopholes but later saying it also had to include tax rate rises.

He said the US had to come to terms with its "spending problem".

"This talk of taxes is almost irrelevant to the size of the trillions and trillions of debt," Mr Hensarling said on This Week.

Republicans see their best chance at putting pressure on Mr Obama in a vote they plan to take early next year to increase the nation's borrowing ability, or debt limit. "Republicans know we have the debt ceiling, and the leverage is going to shift to our side," Mr Corker said.