President Barack Obama and the Republican leader of the US House have met at the White House for talks on a plan to deal with the fiscal crisis that threatens the US economy.
The two negotiators are running out of time if they hope to make an agreement and get it passed by Congress before the so-called fiscal cliff strikes at the beginning of January when an economically toxic mix of huge tax increases and slashing cuts to the Pentagon and other federal agencies begins to take effect.
The meeting came after Speaker John Boehner on Friday offered $US1 trillion ($A950 billion) in higher tax revenue over 10 years and an increase in the top tax rate on people making more than $US1 million a year, his first move in Obama's direction on rates.
Boehner is also offering a large enough extension in the government's borrowing cap to fund the government for one year before the issue must be revisited - conditioned on Obama's agreeing to the $US1 trillion in spending cuts.
The two met for about 45 minutes, officials said.
The idea is to set the broad parameters of an agreement while leaving other steps, like overhauling the tax code and additional cuts to popular programs such as health care for the elderly, to be fleshed out next year.
Obama is also pushing extending jobless benefits for the long-term unemployed and wants some kind of extension of a payroll tax cut.
Boehner's latest offer broke a long impasse. It calls for about $US450 billion in revenue from increasing the top rate on million-dollar-plus income from 35 per cent to the Clinton-era rate of 39.6 per cent.
The additional revenue required to meet the $US1 trillion target would be collected through a rewrite of the tax code next year and by slowing the inflation adjustments made to tax brackets.
In return, Boehner is asking for $US1 trillion in spending cuts from government benefit programs such as health care for the elderly. Those cuts would defer most of a painful set of across-the-board spending cuts set to slash many domestic programs and the military budget by 8-9 per cent, starting in January.
The increased optimism comes as time running out before the adjournment of Congress. Tax rates on all workers go up in January, and $US109 billion worth of across-the-board spending cuts begin to take effect then as well. Taken together with the expiration of extended jobless benefits and a two-percentage-point break in payroll taxes, the combination of austerity steps threatens to send the economy back into recession.