Boehner’s office would not comment on the current state of the talks. Boehner pitches millionaire tax hike

Speaker John Boehner has proposed allowing tax rates to rise for the wealthiest Americans if President Barack Obama agrees to major entitlement cuts, according to several sources close to the talks.

It is the first time Boehner has offered any boost in marginal tax rates for any income group, and it would represent a major concession for the Ohio Republican. Boehner suggested hiking the Bush-era tax rates for top wage earners, including those with annual incomes of $1 million or more annually, beginning Jan. 1, two sources said.


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Obama and Boehner spoke by phone Friday after a lengthy face-to-face session at the White House on Thursday. The quickening pace of private conversations between the two key players in the fiscal-cliff talks shows progress is being made in the negotiations, although they are not close to a deal yet, sources said.

Boehner also wants to use a new method of calculating benefits for entitlement programs known as “chained CPI,” which would slow the growth of Medicare and other federal health programs and save hundreds of billions over the next decade.

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The speaker’s offer would not include extending federal unemployment benefits, and it is unclear how it would address sequestration — the tens of billions in spending cuts scheduled to go into effect for the Pentagon and other federal agencies starting Jan. 2.

And Republicans remain unyielding on agreeing to raise the U.S. debt limit as part of any agreement to avoid the fiscal cliff.

Boehner’s offer on tax rates was a significant move toward Obama’s position. But the proposal, as a whole, still isn’t acceptable to Democrats because of the level of revenue, the changes to entitlement programs that would hit beneficiaries and the absence of an extension for unemployment insurance benefits, according to a source familiar with the talks. The president has also been adamant that any deal include an increase in the debt ceiling.

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Boehner’s office would not comment on the current state of the talks with Obama beyond saying no deal has been reached at this time, nor is one expected soon.

“The lines of communication remain open, but there is no agreement, nor is one imminent,” said Michael Steel, Boehner’s spokesman.

White House officials declined to comment on the latest developments in the fiscal cliff talks.

Boehner has been offering $800 billion in revenue increases as part of an overall agreement with Obama. The president has countered with an offer of $1.4 trillion in new revenue, although he has moved in Boehner’s direction on this issue in recent conversations, sources said.

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Under Boehner’s latest proposal, Republicans are now offering closer to $1 trillion in new revenue, sources said.

Obama has countered with $600 billion in cuts for entitlement and non-mandatory spending programs, hundreds of billions less than Boehner is seeking to trim from those programs, but the president is showing some flexibility on that front, as well.

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But Boehner and the House GOP leadership — which has been adamant about holding the line on keeping the Bush-era tax rates in place — are facing a serious erosion in support from Senate Republicans as the Jan. 1 fiscal cliff deadline grows nearer.

Senate Minority Leader Mitch McConnell (Ky.) and other top Senate Republicans have floated using a “two-bill strategy” to break the budget impasse with the White House.

In one possible scenario, the House would take up a Senate-passed bill to extend the Bush-era tax rates for all but the top 2 percent of wage earners and increase taxes on capital gains and dividends from 15 percent to 20 percent, sending that to Obama thanks to strong support from House Democrats.

The Republican-controlled House would also pass a competing bill to extend the Bush tax rates for all wage earners, regardless of income levels, but that legislation would be derailed in the Democratic-led Senate.

Incoming Senate Minority Whip John Cornyn of Texas and other GOP lawmakers in that chamber have backed the idea of passing a tax-cut bill for all but the top 2 percent of Americans, saying it shifts the debate to spending when Congress must deal with legislation next year to raise the $16.4 trillion debt limit. The United States is expected to reach its borrowing limit sometime in early 2013, likely February or early March, with the exact timing depending on the efficacy of “emergency measures” the Treasury Department can implement to postpone that deadline.