U.S. President Barack Obama and his political opponents in Congress are moving a bit closer to reaching a compromise over contentious year-end financial issues.
No deal appeared imminent Monday. But officials say the leader of the Republican-controlled House of Representatives, Speaker John Boehner, has for the first time offered to let taxes increase for wealthy households earning more than $1 million a year and to raise the country’s borrowing limit.
Obama, the Democrat re-elected last month to another White House term, campaigned to push taxes higher on couples with annual incomes of more than $250,000, though Boehner’s offer suggests the two sides may yet be able to reach an agreement.
The president and Boehner are trying to avert what Washington is calling a “fiscal cliff,” about $500 billion in mandated spending cuts and tax increases that would affect almost all U.S. workers starting January 1, unless they agree on a new financial plan. Analysts say that without a compromise, the shock of the spending trims and higher taxes could send the U.S. spiraling into its second recession in three years.
The U.S. is also likely to reach its borrowing limit of $16.4 trillion by February and would then run out of money to pay some bills. Obama wants to increase the borrowing limit as part of the year-end deal, and Boehner offered an unspecified increase in the debt ceiling that would put off a renewed debate on the issue for a year.
Despite the possibility of movement in the negotiations, the two sides remain divided on the extent of any tax increases and what spending cuts the White House might agree to implement.
Obama is calling for $1.4 trillion in higher taxes over the next decade, with Boehner offering $1 trillion. Obama’s Republican opponents are calling for sharp cuts in popular government health programs for Americans.