With time running out to avoid the "fiscal cliff," President Barack Obama made a fresh offer to Republican House Speaker John Boehner on Monday, dropping the total the White House wants in new tax revenues and raising the amount of spending cuts in an effort to forge a compromise. Boehner's office rejected the deal but vowed to keep talking.

Obama's new proposal — his third since talks began in earnest — brings the two sides markedly closer with just two weeks before across-the-board income tax hikes and deep government spending cuts automatically come into force January 1. Experts worry that, taken together, these measures could plunge the economy into a new recession.

But the package's spending cuts, lower levels on tax hikes, and cuts in entitlement spending could prove as hard a sell to Democrats cheered by the November 6 election as its new revenues could be to Republicans. The proposal would let the payroll tax holiday lapse, but would extend unemployment benefits set to expire in two weeks, and includes an unspecified quantity of infrastructure spending.

The president's latest offer calls for raising $1.2 trillion in new tax revenues on individual income — down from $1.4 trillion in his previous proposal and $1.6 trillion from his opening gambit. It was disclosed after Obama met for 45 minutes with Boehner at the White House on Monday.

Perhaps most notably, the new proposal -- as described by a source familiar with the negotiations -- jettisons the president's core election-campaign demand that Republicans agree to raising tax rates on income above $200,000 for individuals and $250,000 for families. Instead, it would make permanent Bush-era tax cuts on income up to $400,000 while raising them above that level.

The offer would limit itemized deductions to 28 percent while restoring the estate tax to 2009 levels, meaning that assets above the exemption level of $3.5 million would be taxed at 45 percent.

On the spending side of the ledger, Obama offered $800 billion in cuts, plus $130 billion in savings from adopting a new, less generous mechanism for adjusting Social Security benefits for inflation, the so-called "chained consumer price index" (CPI). To soften the blow to liberal Democrats like House Minority Leader Nancy Pelosi, who has warned against any roll-back of benefits, the White House proposed unspecified "tweaks" that will protect "the poorest social security recipients," the source said. Obama gets another $290 billion in interest payment savings.

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The president's proposed savings include $400 billion in health outlays, $200 billion in mandatory spending in other areas, and $200 billion in discretionary cuts — including $100 from the Pentagon. As described, it does not include a Republican push to raise the Medicare eligibility age from 65 to 67.

"Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced," Boehner spokesman Brendan Buck said. "We hope to continue discussions with the President so we can reach an agreement that is truly balanced and begins to solve our spending problem."

Obama's offer would also significantly blunt Republican power to use fights over raising the country's "debt ceiling" to demand spending cuts. It would raise that borrowing authority for two years, while letting Congress take largely symbolic votes disapproving of that step. (Boehner reportedly offered a year-long extension in his previous offer, but conservatives in his fractious caucus are reluctant to abandon what they say as their best leverage to force future cuts).

The source underlined that his was not the White House's "final offer" but called it "a good offer" that shows that the Administration has "met the Republicans more than halfway."