Obama demands Republicans compromise on fiscal cliff

US President Barack Obama leaned heavily on Republicans Wednesday to come to terms on a deficit reduction deal by year's end to avert the "fiscal cliff" crisis of sweeping tax hikes and spending cuts.

But even as Obama said he and the Republican leadership had narrowed their differences to within "a few hundred billion dollars," the two sides appeared locked in stalemate.

House Speaker John Boehner, the Republican negotiating with the president, pressed ahead with a controversial "Plan B" that extends tax breaks for everyone earning less than $1 million per year, and said the House would pass the measure Thursday despite Obama warning he would veto such legislation.

"At some point there's got to be... a recognition on the part of my Republican friends that, you know, take the deal," Obama told reporters, as the two sides struggled to reach agreement on how to prevent tax hikes on all Americans and federal spending cuts that kick in beginning January 1.

Obama had campaigned for months on a platform of extending Bush-era tax breaks for households making under $250,000 a year, as part of a 10-year deficit reduction plan that raises tax revenues and slashes federal spending.

He has since bumped the threshold up to $400,000.

Boehner presented a counter-offer of extending the tax breaks for everyone making under $1 million. Both offers have been summarily rejected, although each side says talks are ongoing.

Despite the brinksmanship pushing right up to the deadline, Obama characterized Republican refusal to acquiesce to his plan as "puzzling," and that there was "no reason why we should" tumble over the fiscal cliff.

"If you look at Speaker Boehner's proposal and my proposal, they're pretty close," Obama said.

Boehner has said he would be satisfied with approximately $1 trillion in tax revenues and $1 trillion in spending cuts, much of it from entitlement programs like Medicare, as part of a 10-year deal.

He has dismissed the latest White House offer as including $1.3 trillion in new revenues, with only $850 billion in net spending reductions.

After Obama's White House appearance, Boehner called a snap press conference to throw down the gauntlet.

"Tomorrow the House will pass legislation to make permanent tax relief for nearly every American -- 99.81 percent of the American people," he said of his Plan B, which he has framed in case his talks with Obama on a broader deficit reduction deal do not bear fruit by the year-end deadline.

"Then the president will have a decision to make. He can call on the Senate Democrats to pass that bill, or he can be responsible for the largest tax increase in American history."

Democratic Senate Majority Leader Harry Reid said it had no chance of passing in the chamber.

Plan B has puzzled many across the political spectrum in part because it offers no spending cuts -- the idea is that those could be finalized early in 2013 -- and he could be seen as encouraging anti-tax Republicans to essentially vote for a tax hike on millionaires.

"What is the speaker trying to prove?" asked an exasperated House Democratic leader Nancy Pelosi.

She said Obama "keeps opening doors for the speaker to go through," but that Boehner's announcement of Thursday's Plan B vote "just slammed the door in the president's face."

Even with earlier confidence about a deal slipping away, Pelosi was careful to say she remained optimistic about a year-end resolution that could pass both chambers of Congress.

"Let's be positive. We're hoping to have an agreement," she said.

Boehner risks a backlash by some conservative groups who see his extension of tax breaks for those earning up to $1 million as a mere "bargaining tactic" that does not come close to solving the fiscal crisis.

"We don't buy into the Washington-speak, suggesting that these are actually tax cuts," Andy Roth, vice president of government affairs for the Club for Growth, one of a number of conservative groups including the Heritage Foundation think tank, which have come out in opposition of the bill.

But Americans for Tax Reform, headed by Grover Norquist, whose anti-tax pledge has been signed by most Republicans in the House, has given lawmakers the green light, saying Plan B technically does not raise taxes.

Obama acknowledged that part of the hesitation about signing on to a sweeping deal laying out some of the steepest deficit reduction in decades might lie with Republicans' refusal to cooperate with him.

"But you know, at some point they've got to take me out of it and think about their voters," he said.

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