Lawmakers voice confidence in prospects for a deal after 'fiscal cliff' talks

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Obama to meet with congressional leaders on 'fiscal cliff'

Peter Doocy reports from the White House

With the clock ticking, congressional leaders left a meeting with President Obama on Friday voicing confidence that they can strike a deal to avert the so-called "fiscal cliff" and avoid the crush of tax hikes and spending cuts that threaten to cripple the economy next year.

The meeting at the White House served as the kick-off to talks, with lawmakers face an end-of-year deadline to reach an agreement. Senate Republican Leader Mitch McConnell described the meeting as "constructive."

House Democratic Leader Nancy Pelosi said she's "confident that a solution may be in sight."

Lawmakers, though, were light on specifics other than to reiterate their positions. Pelosi said any deal "has to be about cuts" and revenue. McConnell said Republicans are "prepared to put revenue on the table provided we fix the real problem" -- a reference to Republicans' call to overhaul entitlements.

Obama, speaking at the start of the meeting, described the talks as "urgent business" and said he hoped the meeting would be the start of a "fruitful process." Press Secretary Jay Carney later described the sit-down as "constructive."

The two sides remain far apart, despite indications that middle ground could be reached. Though the "fiscal cliff" entails a host of defense and domestic spending cuts and the expiration of the Bush-era tax rates, the principal divide has been over whether to keep tax rates as they are for everyone or to let them rise for families making over $250,000.

Rep. Shelley Moore Capito, R-W.Va., in an interview on FoxNews.com's "Power Play" on Thursday, stepped away from the long-held party line and said a future discussion "could include tax rates."

But Capito was not among the Republican lawmakers in the room with Obama Friday, and GOP leaders so far have resisted any move to raise tax rates. Rather, they have opened the door to closing loopholes and deductions as a way to raise revenue.
At the same time, Democratic leaders have insisted on raising rates for top earners and are now facing pressure from the liberal wing of the caucus to seek more concessions from Republicans.

A group of Democratic senators, in a draft letter obtained by Fox News, this week was urging Obama to do more than end the lower Bush-era tax rates for the top 2 percent of earners. They argued that for every dollar cut from the government's bloated budget, lawmakers should impose an additional dollar in tax hikes.

"Any deal must include a one-to-one ratio of revenues to spending cuts," the senators write.

But that's a heavy hit for taxpayers. For a deficit-reduction deal worth $4 trillion -- which is a number commonly cited by economists -- that would mean $2 trillion in new taxes over the next 10 years.

They also urged that any fiscal cliff package should include more stimulus-style measures -- which would in turn require more tax hikes or spending cuts to offset them.

The proposal only served to underscore the massive, and perhaps growing, divide between the liberal and conservative wings on Capitol Hill.

At a news conference Wednesday, Obama claimed he is open to compromise.

"With respect to the tax rates, I just want to emphasize I am open to new ideas," he said. "If Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn't getting hit, reduces our deficit, encourages growth, I'm not going to just slam the door in their face. I want to hear ideas from everybody."

But the Senate Democrats' letter showed the kind of pressure Obama could face from the left not to budge in negotiations. The letter was signed by Sen. Jay Rockefeller, D-W.Va., and Sen. Tom Harkin, D-Iowa, and the authors were looking to attract a dozen signatures.

The senators also effectively called for Medicare, Medicaid and Social Security to be walled off from any "harmful cuts."