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McCarthy sees possible Obama, Pelosi split on ‘fiscal cliff’ framework

House Majority Whip Kevin McCarthy (R-Calif.) said Monday he saw a "possibility" that President Obama and House Minority Leader Nancy Pelosi (D-Calif.) are divided on whether tax rates on the top wage earners would need to rise in a proposed deal to avoid the "fiscal cliff."

Republicans said last week that they were willing to consider new "revenues," although they largely oppose raising tax rates for families making more than $250,000 per year. Instead, GOP lawmakers prefer to find new revenues by limiting deductions and close tax loopholes, enabling them to say they had kept overall tax rates unchanged.

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McCarthy, asked during an interview with Fox News if recent comments from Pelosi indicating that she would insist on tax-rate increases for the wealthy amounted to a "game stopper," suggested that he saw daylight between Obama and the top Democrat in the House.

"Well, the president isn't saying that," McCarthy said. "Remember this. Nancy said last May that it had to be a tax increase on those a million and more. She keeps changing the game plan, that can't be the case."

McCarthy went on to say that proposals to just adjust tax rates without additional tax reform would not make a significant enough dent in the federal deficit.

"If the president just went and changed the tax rates, that pays for eight days," McCarthy said. "Where do we go from there? The president also says that he wants a balanced approach… we haven't heard of where his cuts are."

McCarthy was again asked if believed Pelosi and Obama were not "in lock-step" with one another.

“I see that as a possibility," the California lawmaker replied. "I think elections are over. Let’s sit down and find a bipartisan way that we can solve this problem, not go to a fiscal cliff, while at the same time have a pro-growth agenda where we grow jobs."

Pelosi's office on Monday, though, denied any rift between the Minority Leader and the president, saying Republicans were trying to manufacture a split with House Democrats from thin air.

"Leader Pelosi fully supports the president and has stated her strong commitment to avoid the fiscal cliff, because America's middle class and economy cannot afford the damage," said Pelosi spokesman Nadeam Elshami. "She has stated so publicly many times."

Pelosi and other Democrats — including Treasury Secretary Tim Geithner — in the past have said simply eliminating loopholes would not provide enough additional revenues to continue programs they say grow the economy.

"So just to close loopholes is far too little money, and it could be they have said they want it to be revenue neutral," Pelosi told ABC News. "If it's going to bring in revenue, the president has been very clear that the higher-income people have to pay their fair share."

But in his interview, McCarthy stressed that a solution to the fiscal cliff required "structural change" and that the plan to raise tax rates "hurts the economy."

"The only way to do that is overall tax reform, that's what we're talking to the president about," McCarthy said. "If he wants revenues we are not saying ‘no’ to revenues, what we're saying is you don't get that by raising the tax rates — you get that by loopholes."

This story was updated at 2:45 p.m.

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