Boehner and Obama No Closer to Fiscal-Cliff Deal After Latest Offers

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While there is increased communication between the two chief negotiators, they remains hundreds of billions of dollars apart.

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John Boehner of Ohio leaves his office on Tuesday and walks to the House floor to deliver remarks about negotiations with President Obama on the fiscal cliff. (J. Scott Applewhite/Associated Press)

After swapping more offers and counter offers early this week, President Obama and House Speaker John Boehner remain hundreds of billions of dollars apart in talks to avert the recession-threatening fiscal cliff, as both frustration and deadline pressure grow.

On Monday, Obama gave Boehner a revised offer that lowered the amount of tax revenue he was seeking from $1.6 trillion to $1.4 trillion and upped the revenue cuts from about $400 billion to about $600 billion.

The next day, Boehner responded in kind. Since the White House didn't move much from its original offer, Boehner didn't move much from his, according to a House GOP leadership aide. Boehner's latest offer included $800 billion in revenue and over $1 trillion in cuts.

Republicans are frustrated that the president refuses to offer up spending cuts that are equal to his revenue demands, the aide said.

Adding to Republicans' frustration are Senate Democrats, who continue to insist that last year's $1 trillion in cuts should be counted in this round of negotiations and Obama himself, who predicted that Republicans will cave on taxes in a Tuesday interview with ABC News.

And despite Obama and Boehner talking by phone on Tuesday, there were more signals from Capitol Hill that things are not going well. House Ways and Means staff told members to be prepared to come back the week between Christmas and New Year's, a senior GOP aide said.

Indeed, time is running short for Washington to avert $500 billion in year-end tax increases and spending cuts. And while much of Washington had thought the heated public rhetoric was masking more serious and deliberate negotiations, the numbers don't lie. Obama and Boehner are still miles apart.

On the other end of Pennsylvania Avenue, the White House tried to sweeten its latest offer to House Republicans by including an overhaul of the corporate tax code, according to sources familiar with the fiscal cliff talks.

While a Boehner spokesman quickly downplayed the revised offer, saying what's needed is comprehensive tax reform that includes the individual side of the code, the Obama administration's inclusion of corporate tax reform could win allies in the business community that the GOP might find hard to ignore.

The sources would not share details of the corporate reform plan Obama sent Boehner.

This latest offer arrived during a week when business had already ramped up its calls for a big tax and budget deal. The influential lobbying group, Business Roundtable, urged Republicans in a letter to agree to an increase in tax rates if that's what it took to reach a compromise while also calling on Obama and Democrats to commit to entitlement and spending cuts.

Other prominent business leaders and groups from Goldman Sachs CEO Lloyd Blankfein to the Fix the Debt coalition have supported revenue increases alongside spending cuts as part of a grand compromise -- public proclamations that only add to the pressure on the House Republicans.

Any overhaul of the corporate tax code is bound to appeal to the corporate community, which Obama has assiduously courted in the past few weeks. It's part of his strategy to boost support outside the beltway and put pressure on Congress.

Still, Boehner's spokesman, Michael Steel, called the White House's inclusion of the corporate tax code piece "a red herring."

"We've always said you need to do both, given the way they interact," he wrote in an email. "The issue is the individual rates because of the small business jobs impact."

This isn't the first time the president has proposed an overhaul of the corporate tax system. In February 2011, he released a framework that proposed lowering the corporate tax rate to 28 percent. It also gave manufacturers an even lower tax rate of 25 percent and gave breaks to companies that brought jobs back to the United States.

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Presented by

Chris Frates and Nancy Cook

Chris Frates is the lobbying correspondent for National Journal. Nancy Cook is the budget and tax correspondent for National Journal.

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