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Obama, Boehner meet again as fiscal cliff talks heat up

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Washington (CNN) -- President Barack Obama and House Speaker John Boehner met at the White House on Monday after the top Republican negotiator made concessions over the weekend that moved the talks to a new level.

The 45-minute meeting was their third face-to-face discussion in eight days, a sign of acceleration in the negotiations that seek to avert the automatic tax increases and spending cuts of the fiscal cliff set to take effect in the new year.

Sources told CNN over the weekend that Boehner's latest proposal dropped Republican opposition to two key demands by Obama -- higher tax rates on the wealthiest Americans and an automatic extension of the federal debt limit.

After reports emerged of Boehner's new offer, his office insisted that no deal had been reached but didn't dispute the information from the sources about the concessions.

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

At the White House, spokesman Jay Carney made clear to reporters Monday that more work needed to be done.

"The president's proposal is the only proposal that we have seen that achieves the balance that is so necessary" between revenue and cost-cutting, said Carney, who refused to discuss specifics.

"Any potential agreement would not only have to align with the president's principles, it would require tough choices by both sides, including the president and including Republicans,"Carney said.

On the Tea Party Nation website, prolific blogger Judson Phillips complained that Boehner was conceding too much too soon.

"If the Republicans in Congress allow John Boehner to continue to negotiate, Barack Obama will have total victory," Phillips wrote Monday in championing his group's conservative ideology of balancing the federal budget through spending cuts alone.

Congress had been scheduled to end its work last week, but legislators returned to Washington on Monday and leaders warned members to be prepared to stay until Christmas and return after the holiday until the year's end.

"It appears at this stage -- we'll see if anything changes -- but it appears we're going to be coming back the day after Christmas to complete work on the fiscal cliff," Senate Majority Leader Harry Reid, D-Nevada, said Monday.

Last week, U.S. Rep. Chris Van Hollen, D-Maryland, said a deal would have to be reached by Christmas to allow time for the legislative process to approve the required measure or measures by the end of the year.

On Monday, multiple sources familiar with the talks told CNN that the negotiations now focus on a $2 trillion framework that would include roughly $1 trillion in revenue from tax hikes and reforms and $1 trillion in savings from entitlement programs and spending cuts.  

According to the sources, the framework under discussion is being pushed by Republicans, and it was unclear if the plan could get enough support from Democrats to win congressional approval in the next two weeks.

Obama's liberal base opposes substantive reforms to entitlement programs such as Social Security, Medicare and Medicaid.

Democratic sources said the $1 trillion in savings under consideration in the deficit talks includes changes to Medicare, including a discussion of raising the current eligibility age of 65.

Boehner's concessions on some higher tax rates and the debt ceiling sought to put the onus on Obama to bring Democrats closer to the changes sought by the GOP.

Obama has repeatedly said that once Republicans accepted that tax rates on high-income Americans must increase, he would be willing to negotiate on other issues.

The president also has insisted that raising the federal debt ceiling should be separated from the political process of negotiating deficit reduction.

According to one source, who spoke on condition of not being identified further, Boehner proposed allowing tax rates on household income at $1 million and above to return to the higher rates of the 1990s while extending current reduced rates for all income up to that threshold.

The president demands that tax rates increase on incomes over $250,000, a stance that was central to his re-election campaign and is supported by most Americans, according to consistent poll results.

Boehner has been under pressure from the White House, Democrats, the business community and some fellow Republicans to give up a staunch opposition to any increase in tax rates.

Conservatives trying to shrink the federal government generally oppose increasing tax revenue. They are particularly opposed to higher tax rates because history shows that once rates go up, it is difficult to later reduce government revenue by lowering them again.

Obama and Democrats argue that increased revenue, including higher tax rates on the wealthy, must be part of broader deficit reduction to prevent the middle class from getting hit too hard.

In addition to relenting on some higher tax rates, Boehner also proposes closing some loopholes and limiting deductions to bring a total gain of $1 trillion in revenue, source said.

The framework under discussion includes an increase in the federal debt limit next year without further congressional approval, a key demand by Obama. An aide to Boehner said any such increase would have to be offset by spending cuts and reforms in the deal.

Brinksmanship over that issue led to an unprecedented downgrade of the U.S. credit rating last year.

Boehner's proposal also includes what is called a chained consumer price index, which takes into account changes in quantity and prices of products.

The consumer price index is applied to many entitlement benefits, such as Social Security, to protect participants against rising prices. The chained CPI includes assumptions on consumer habits with regard to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases in future years.

Labor unions and advocacy groups for the elderly are expected to oppose it.

Before Monday, Boehner met Thursday afternoon with Obama at the White House in their second face-to-face talks of the week. The two then spoke by phone Friday, according to news reports.

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