Sides make progress on fiscal cliff

President Obama and Speaker John Boehner met at the White House on Monday as negotiations to reach a “fiscal cliff” deal appeared to make progress toward a year-end agreement.

Boehner (R-Ohio) has put higher tax rates on the table and offered to raise the debt ceiling but is holding out for bigger entitlement reforms and spending cuts from Obama.

Officials briefed on the talks projected more optimism after the flurry of meetings and high-level phone calls in recent days, but they cautioned that a deal is not yet at hand.

Obama and Boehner are “ways and ways away from a deal yet,” a close friend of the Speaker’s, Sen. Saxby Chambliss (R-Ga.), said as he emerged from a 15-minute meeting with Boehner.

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Lawmakers and senior aides said it was unlikely — but not impossible — that an agreement would be struck with enough time to pass it through Congress by Christmas, raising the chances of a rare pre-New Year’s session in the Capitol.

“If things don’t change, it appears we’ll be coming back the day after Christmas to finish up work on the fiscal cliff and other items,” Senate Majority Leader Harry Reid (D-Nev.) said in a floor speech Monday.

Discussions heated up after Boehner, during a phone call with Obama on Friday night, moved off his long-held position by saying he would consider raising tax rates on people earning more than $1 million annually in exchange for “substantial spending cuts and reforms.”

The specific entitlement reforms the Speaker is seeking include an increase in the eligibility age for Medicare, to 67 from 65, and a change in the way inflation is calculated for the purpose of determining Social Security benefits and other policies, commonly referred to as “chained CPI.”

Both sides have sought to keep the details of the talks closely held, and neither Boehner’s office nor the White House would comment on the substance of the discussions on Monday or over the weekend.

As a result, exactly what entitlement changes Obama is willing to accept remain unclear. A source close to the Republican side said the White House is showing openness to chained CPI, changing the Medicare age and additional “means-testing” for Medicare.

But with time running out, that source said a year-end deal might punt decisions on key expiring provisions to next year, including extending other tax policies and unemployment benefits and fixing the Medicare reimbursement rate for doctors.

But a Democratic source in close contact with the White House said the administration was sending out conflicting signals, leading some to believe Obama is willing to make significant changes to entitlement programs and others thinking he will resist measures like raising the eligibility age and chained CPI.

Leading congressional Democrats have all but ruled out support for raising the eligibility age for Medicare in recent days.

On taxes, the White House rejected Boehner’s offer for raising rates on income above $1 million. Obama has called for rate hikes on family income above $250,000, but the White House has not ruled out a compromise.

Boehner has also offered for the first time to link a debt-ceiling increase to the fiscal-cliff deal, but aides say he is sticking to his demand that an equal or greater amount of cuts and reforms accompany any additional borrowing authority.

The conservative Heritage Action and Club for Growth groups on Monday denounced reports that Boehner had offered to increase the debt ceiling for a year as part of a fiscal-cliff agreement.

“Raising the debt ceiling would give away one of the best tools the Republicans have in their arsenal to force real reform,” Club for Growth President Chris Chocola said in a statement. “The debt ceiling is the only mechanism in law that can restrain spending, and hitting it forces Washington to confront its spending problem. Raising the debt limit again simply kicks the can down the road. Instead of raising the debt ceiling, the Republicans should use it to force President Obama and the Democrats to accept structural reforms to entitlements, which are the drivers of our debt.”

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Rep. Tom Price (Ga.), a conservative who lost his bid for a leadership post last month, used a Twitter message to suggest Boehner should hold out for more. “A debt ceiling increase shouldn’t be considered in #fiscalcliff talks w/out Medicare reform, like premium support,” Price wrote. A spokeswoman said he was unavailable for an interview.

Republicans and Democrats alike are looking to a meeting Tuesday of the House Republican Conference for an indication of how much resistance Boehner will face from his membership to his offer to raise tax rates and the debt ceiling.

So far, he has kept both his leadership team and a majority of rank-and-file members behind him.

A GOP leadership aide said the Speaker had updated fellow members of the leadership constantly throughout the weekend. “Leadership is united,” the aide said.

Another senior aide said, “People are cautiously optimistic that he can swing a deal that will be a good deal” for leadership and the rank and file.

Still, the vast majority of Republicans remain in the dark about the negotiations between the Speaker and the president.

“There was no communication” over the weekend, said freshman Rep. James Lankford (R-Okla.), who will formally take a seat at the leadership table in January. He said he would wait to see the details of any proposal or agreement before weighing in. “We have a lead negotiator, and that negotiator is the Speaker,” Lankford said.

— Molly K. Hooper contributed.