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Fiscal cliff negotiators can't even agree on whether they're making progress

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Photo - House Speaker John Boehner and President Barack Obama (AP photo)
House Speaker John Boehner and President Barack Obama (AP photo)
Politics,Congress,Susan Ferrechio,Campaign 2012

Negotiations over pending tax increases and massive spending cuts have become so gridlocked that those at the heart of the deal-making can't even agree on whether they're making progress.

At the White House, spokesman Jay Carney on Tuesday declared that "significant movement toward compromise" had been made in the discussions. On the other end of Pennsylvania Avenue, however, Senate Majority Leader Harry Reid, D-Nev., offered a different perspective.

"There's been little progress with Republicans," and no compromise is in sight, Reid said.

The financial markets appeared to side with Reid and began to drop soon after the Senate's top Democrat offered his dour assessment.

The White House and Congress have just weeks left to strike a deficit-reduction deal that would avert the so-called fiscal cliff -- a collection of across-the-board tax increases and massive automatic spending cuts that both sides agree would devastate the still-ailing economy.

Aside from a weekend phone call, President Obama hasn't been in touch with House and Senate leaders since before Thanksgiving. The president, however, this week is taking his proposals -- including a tax increase for the wealthiest taxpayers -- directly to the American people with a campaign-style blitz that will begin in Pennsylvania.

Meanwhile, Democratic and Republican senators met separately behind closed doors Tuesday to consider options but emerged with no indication that progress had been made. Democrats continue that taxes should be raised to help reduce the deficit. Republicans want spending cuts and reforms in the government's biggest spending programs, Social Security, Medicare and Medicaid.

Republicans said an increase in the tax rate for anyone is out of the question. Democrats said they are willing to make some spending cuts but declared entitlement reform "off the table."

"We all know that the most critical steps to be taken are to save the entitlements, which are on an unsustainable path to bankruptcy," Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. "There's no better time to begin to fix that problem than right now."

With neither side moving toward the middle, House Speaker John Boehner, R-Ohio, is set to meet Wednesday with Erskine Bowles, a moderate Democrat who recently co-chaired Obama's commission to reduce the nation's debt, in hopes of nudging the process forward.

The commission led by Bowles, a chief of staff to former President Clinton, proposed a comprehensive approach toward reducing the debt that included $2 trillion in tax increases, spending cuts and entitlement reforms. Both sides rejected the recommendation, and Bowles has since proposed a less ambitious, $800 billion plan in which Boehner has expressed interest.

Bowles latest plan still includes a mix of spending cuts and tax increases. But Senate Budget Committee Chairman Kent Conrad, D-N.D., told The Washington Examiner on Tuesday that the additional revenue that Bowles said is needed could be raised by closing loopholes in the tax code, and raising tax rates on capital gains and dividends, avoiding the income tax increase that Republicans oppose.

Even as negotiations ground on, Reid upped the stakes Tuesday, saying that any deficit-reduction compromise also must include a plan to raise the nation's debt ceiling, the amount the government can borrow to fund its operations. The current $16 trillion limit will be reached early next year, but Republicans have resisted raising it without corresponding spending cuts.

"It has got to be a package deal," Reid said.

sferrechio@washingtonexaminer.com

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Susan Ferrechio

Chief Congressional Correspondent
The Washington Examiner