Obama, Boehner grapple near ‘fiscal cliff’

Racing to find common ground in the “fiscal cliff” negotiations, President Obama and House Speaker John A. Boehner are backing off what were once ironclad positions on taxes and spending — though not enough to reach an agreement just yet, as both men continue to demand additional concessions before signing off on a year-end deal.

Mr. Obama has folded on his opposition to some entitlements cuts, while Mr. Boehner, Ohio Republican, caved on his opposition to higher taxes. The moves have drawn fire from the liberal and conservative ranks, but also generated a renewed sense of optimism that the two men are closer to a deal that addresses the George W. Bush-era tax cuts set to expire Jan. 1 and the $110 billion in automatic spending cuts set to kick in Jan. 2, which were part the deal lawmakers made last year.

Still, Mr. Boehner signaled Tuesday that the two sides have their differences, telling reporters that he would bring a “Plan B” bill to the House floor for a vote this week as a way of demonstrating that Republicans want to “protect as many American taxpayers as we can” from tax increases.

The alternative plan borrows from House Minority Leader Nancy Pelosi, California Democrat, who earlier this year proposed the $1 million threshold for tax increases — much higher than the $250,000 level Mr. Obama wanted.

“Our ’Plan B’ would protect American taxpayers making $1 million or less and would have all of their current rates extended,” said Mr. Boehner, adding that negotiations with the White House will continue on a broader package.

Democrats said Mr. Boehner’s “Plan B” was a non-starter.

House Minority Whip Steny H. Hoyer, Maryland Democrat, said Mrs. Pelosi’s $1 million plan was only a “ploy,” and Mrs. Pelosi said she was only trying “to smoke out the Republicans’ true position” back then.

“Republicans said ’no’ six months ago; the president took his case to the American people to use $250,000 as a threshold for higher tax rates, and the public supported him,” Mrs. Pelosi said.

Republicans said Democrats continue to move the goal posts.

Since the election, Mr. Boehner has offered an $800 billion tax increase plan that was similar to one Mr. Obama supported last year; he offered one he said was based on testimony by Erskine Bowles, co-chairman of Mr. Obama’s 2010 deficit commission with former Sen. Alan K. Simpson; and he has offered the Pelosi $1 million plan, which mirrors one offered by Sen. Charles E. Schumer, New York Democrat, in 2010.

Each of those has been rejected by Democrats, who said the intervening election has strengthened Mr. Obama’s hand.

“Republicans should have taken Sen. Schumer’s offer two years ago when they had the chance,” said Brian Fallon, a spokesman for Mr. Schumer. “We’ve had an election on the president’s tax plan, the president won, and Republicans can’t turn the clock back.”

With two weeks to go before the Bush-era tax cuts expire, both sides are showing an increased willingness to offer concessions.

Mr. Obama has gone from wanting to raise taxes on families making at least $250,000 a year to those making $400,000 or more a year, and dropped his push to extend the 2 percent payroll tax cut another year. He also backed off his demand for a permanent increase in the debt ceiling — instead calling for a two-year extension — and is now open to lowering the cost-of-living increases for most Social Security recipients.

Mr. Boehner, meanwhile, said early in the negotiations that the House GOP would support raising more revenue via tax reform as long as Democrats accepted “real spending cuts.” He also said that “any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it.”

Over the weekend, though, he offered Mr. Obama a proposal that included an increase in the nation’s borrowing limit, $1 trillion in spending cuts and $1 trillion in tax increases, some of it on millionaires.

The Republican leader also left the door open for some of the $1 trillion in cuts to be used to replace the automatic spending cuts looming next year — a move that appears to violate his previously stated belief that any increase in the federal debt ceiling be matched dollar for dollar with reductions in spending.

On Tuesday, he suggested that raising the eligibility age for Medicare from 65 to 67 no longer has to be part of the end-of-the-year deal.

Rep. Tom Cole said Mr. Boehner was dealt a “tough hand” because the House speaker must gain the support of Mr. Obama and the Democrat-controlled Senate to stop the Bush-era tax cuts from expiring.

“I think the people that are shooting at him should be applauding him,” said Mr. Cole, Oklahoma Republican. Mr. Cole said Mr. Boehner has persuaded Mr. Obama to relent on his initial tax demand — likely ensuring that tax rates for 99 percent of income-tax payers are locked in at the current rates. He also said House Republicans are fighting for a framework that forces Democrats to negotiate tax and entitlement reform next year.

“We now have a negotiating counterpart who is not a partner, but an adversary,” Mr. Cole said. “We are trying to drag out as much as possible as we can.”