Fiscal cliff: Partisan differences narrow in negotiations over US budget

Republican Speaker and White House offer concessions as deadline for automatic cuts nears

Negotiations between the White House and Republicans over a complex package of measures to start narrowing the giant gap between what America spends every year and what it collects in taxes appeared yesterday to have accelerated with both sides offering concessions.

Obstacles still remain and even if the Republican Speaker of the House, John Boehner, indeed hammers out a compromise plan with President Barack Obama as early as this week he will still struggle to persuade some members of his own party to vote for it. Some on his right flank, including those from Tea Party, will struggle to swallow the pill if, as now seems certain, it includes some tax increases for the rich.

Much is at stake because a failure to reach a deal by 1 January will mean the automatic triggering of an array of painful austerity measures including quite significant tax increases for almost every working American and a raft of painful cuts in spending. The chilling effect could be enough to knock the US back into recession.

Mr Boehner told members of his party in a private meeting that he would prepare a back-up bill with cuts and higher taxes for families earning over $1m just in case the talks fall apart. But clearly he hopes that won't be needed. "I continue to have hope that we can reach a broader agreement with the White House," he told reporters.

The ice broke last Friday when Mr Boehner for the first time offered some degree of tax-rate increases on the rich. He made the offer quietly while the country was focused on the school shooting in Connecticut. There is also some indication that the tragedy has meant a softening of partisan belligerence in Washington.

"Americans don't need more stress at this time," Mr Boehner said last night when asked why things had suddenly started to move forward.

The distance each must travel to reach a deal is now relatively small. Essentially, Mr Boehner wants a balance between $1trn in spending cuts and $1trn in new revenues over 10 years. Mr Obama wants slightly less pain on the spending side and more meat on the revenue side.

He has already agreed, however, that tax rises should apply only to families earning $400,000 or over, not the $250,000 threshold he had originally proposed.

Mr Obama has also dropped a demand that a final package gives him permanent authority to raise the country's borrowing limit – the debt ceiling – as and when necessary.

It was a fight over raising the debt ceiling last year that damaged the US credit rating and led to the litany of almost indiscriminate spending cuts that will start to come in effect on 1 January if a deal is not done. Mr Obama is instead asking for debt ceiling authority only for two years.

$1trn

Amount Boehner wants in spending cuts and new revenues over 10 years

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
News
peopleComedian launches stinging attack on PM
Life and Style
The collection displayed Versace’s softer side, with models wearing flowers and chiffon dresses in unusual colourings
fashionVersace haute couture review
Arts and Entertainment
'The Leaf'
artYes, it's a leaf, but a potentially very expensive one
News
Yoko Ono at the Royal Festival Hall for Double Fantasy Live
people'I wont let him destroy memory of John Lennon or The Beatles'
News
Could Greece leave the EU?
news
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Web Team Leader

£30000 - £35000 per annum: Recruitment Genius: One of the UK's leading web des...

Recruitment Genius: Client Manager

£27000 - £35000 per annum: Recruitment Genius: A growing, successful, friendly...

Recruitment Genius: Property Negotiator - OTE £20,000+

£16000 - £25000 per annum: Recruitment Genius: This family owned, independent ...

Recruitment Genius: Sales Administrator - Spanish Speaking

£17000 - £21000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'