‘Fiscal cliff’ talks bogged down by dispute over cost of retirement programs

Republicans have insisted that the George W. Bush-era rates be extended for all taxpayers, a move that would maintain the top tax rate at 35 percent. Democrats, including Obama, have called for the Bush rates for the wealthy to expire, a move that would send the top rate to 39.6 percent and raise about $850 billion in revenue over the next decade.

In a news conference two weeks ago, Obama suggested that he was open to setting the top rate somewhat lower than 39.6 percent; some Democrats have suggested a rate as low as 37 percent. Obama expressed that openness more directly this week, Bowles said, saying some of the $800 billion could come from limiting deductions and other tax breaks, as Republicans prefer.

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At the White House Wednesday, President Obama addressed a group of Americans whose taxes would go up if Congress fails to extend the middle class tax cuts.

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The White House believes “that the only way you can make it real is to have it come in the form of higher rates. But it all doesn’t have to come out in the form of higher rates. Some of it can come in the form of deductions and credits,” Bowles said. “I heard it not only from the team but from the president.”

At the Capitol, Boehner was firm in his insistence that Republicans would not compromise on tax rates. During a closed-door meeting of House Republicans on Tuesday morning, Boehner brushed aside a suggestion from Rep. Tom Cole (Okla.) that Republicans acquiesce to Democratic demands to pass legislation that would extend the Bush tax cuts only for income under $250,000 a year.

Cole, a close Boehner ally, told his colleagues that maintaining rates for the vast majority of Americans would be the smart political move. But no other Republican spoke in favor of that position, according to those present. And Boehner later told reporters that he thinks Cole’s position is wrong.

“We’re willing to put revenue on the table as long as we’re not raising rates,” Boehner said.

Negotiations are set to resume Thursday when Geithner and Nabors meet with Boehner and other top Republicans, including Majority Leader Eric Cantor (Va.), Ways and Means Chairman Dave Camp (Mich.) and Budget Committee Chairman Paul Ryan (Wis.). Ryan, fresh off the campaign trail as Republican presidential candidate Mitt Romney’s running mate, has agreed to help Boehner vet ideas and round up GOP support for an eventual deal.

Geithner and Nabors are scheduled to meet separately with Senate Minority Leader Mitch McConnell (R-Ky.), as well as Reid and House Minority Leader Nancy Pelosi (D-Calif.).

Obama, meanwhile, expressed optimism Wednesday about the odds of a deal coming together. Speaking at the Eisenhower Executive Office Building, he urged voters to pressure Congress to freeze tax rates for the middle class, warning that congressional inaction could cost the average family more than $2,000 next year.

“When the American people speak loudly enough, lo and behold, Congress listens,” Obama said, introducing a Twitter hashtag, #My2K, for venting complaints. “My hope is to get this done before Christmas.”