Washington, DC - President Obama and congressional leaders kicked off talks today on how they might avoid the looming fiscal cliff.
"My hope is this is going to be the beginning of a fruitful process where we'll be able to come to an agreement that reduces our deficit in a balanced way, that we will deal with some of these long-term impediments to growth, and we're also going to focusing on making sure that middle-class families can get ahead," Obama said.
Democrats and Republicans agree that taxes shouldn't go up on middle-class families, but the two sides remain at odds about whether to raise taxes for the wealthiest Americans.
The impasse is one of many hurdles the president and a divided Congress must resolve before the end of the year when all of the George W. Bush-era tax cuts expire and sweeping spending cuts begin. The combined effect of tax increases and spending cuts threaten to put the U.S. economy into recession if Washington can't resolve it.
Congressional leaders emerged from the meeting offering conciliatory messages and a united view that a deal can be reached. House Speaker John Boehner, R-Ohio, reiterated his pledge to put revenue on the table as long as individual rates do not rise, while Minority Leader Nancy Pelosi, D-Calif., said spending cuts will have to be part of a final deal.
"I believe that we can do this and avert the fiscal cliff that's right in front of us today," Boehner said, adding that any revenue must be accompanied by cuts to entitlement programs such as Medicare and Medicaid.
Pelosi said she hoped Congress and the president could agree to a number for long-term deficit reduction to work on next year before the Christmas holiday, while setting "milestones for success" in the short term to avoid heading over the cliff and to reassure Americans and Wall Street.
"It has to be about cuts, it has to be about revenue, it has to be about growth, it has to be about the future," she said. "[The meeting] was good. I feel confident that a solution may be in sight."
Senate Majority Leader Harry Reid, D-Nev., said aides would continue talks through the Thanksgiving holiday next week when Congress is out of session. Leaders will meet with Obama again the following week.
"So our challenge is to make sure that we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus to do the people's business," Obama said.
Minority Leader Mitch McConnell, R-Ky., said Republicans generally view spending as a bigger problem than revenue. "We fully understand that you can't save the country until you have entitlement programs that fit the changing demographics of America in the coming years," he said.
Retiring Senate Budget Committee Chairman Kent Conrad, D-N.D., told CNBC that a significant deal was not realistic unless taxes go up, at least on capital gains and dividends. "You have to have rate increases," he said. Conrad supports a long-term $5 trillion deficit reduction target.
Vice President Biden, Treasury Secretary Timothy Geithner, White House Chief of Staff Jack Lew and National Economic Council Director Gene Sperling also took part in the meeting.
Written By: Aamer Madhani and Susan Davis, USA TODAY