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Fiscal Cliff Talks Kick Off on Optimistic Note

Talks to avert the year-end fiscal cliff began on a hopeful note at the White House Friday, with the top Democratic and Republican leaders leaving an hour long meeting with President Barack Obama expressing confidence that they can reach a deal and work toward a compromise marrying new revenue with spending cuts in the coming weeks.

To the extent there was a breakthrough, it came with both Speaker John A. Boehner and Senate Minority Leader Mitch McConnell offering up revenue — which has long been the sticking point — although how much and how it will be achieved, remains to be seen. Boehner of Ohio and McConnell of Kentucky have at least in tone moved in Obama’s direction, although the key question of what to do with the top tax rates at the end of the year remains a sticking point.

Perhaps even more significant is that all four leaders — Boehner, McConnell, Senate Majority Leader Harry Reid, D-Nev., and House Minority Leader Nancy Pelosi, D-Calif., —appeared together at the microphones set up outside the West Wing. The rare show of unity reflects the public angst over the issue, and perhaps a post-election opening for bipartisan accomplishment. No one wants to be seen as the one who pushed the country over the cliff and into a possible recession.

Boehner, who has long been the key to reaching any deal, told reporters he proposed a framework for dealing with the cliff that would largely kick major decisions to next year. He offered to tie revenue from a tax reform package to be written next year to spending cuts that would also come from the 113th Congress. The proposal was consistent with the president’s call for a balanced approach, the Ohio Republican said.

“I believe that we can do this and avert this fiscal cliff,” Boehner told reporters outside the White House.

All of the leaders made similar comments that were long on hope but short on the thorny specifics.

“We’re prepared to put revenue on the table as long as we solve the real problem,” McConnell said, pointing to growing entitlement spending.

“I feel confident that a solution may be in sight,” Pelosi said. She added that the leaders hope to reach a deal before Christmas, and said she suggested during the meeting that they lay out benchmarks for the size of the deal and deadlines before then to build public confidence that the fiscal cliff would be averted.

According to a Boehner aide, the speaker suggested that the leaders agree on long-term revenue targets for tax reform and spending targets for entitlement reform, as well as enforcement mechanisms that would kick in if Congress fails to act on either next year.

“They would be in place unless or until more thoughtful policies replace them,” the aide said.

That effectively would set up a new pair of fiscal cliffs sometime next year.

The details, such as who would be tasked with finding cuts and revenues and how they would move through Congress, and the makeup of the enforcement mechanisms, remain to be worked out.

Though he did not reference the Boehner framework, Reid seemed leery of pushing many decisions into next year.

“We have a cornerstone of being able to work something out,” Reid said. “And so it is like when we arrive at a point where we all know something has to be done, there is no more ‘Let’s do it some other time.’ We’re going to do it now.”

However, “constructive” was certainly the watchword of the day and was used by most of the leaders as well as by White House Press Secretary Jay Carney, who issued a statement saying the leaders “agreed to do everything possible to find a solution” and find a “balanced approach” including revenue and cuts while encouraging growth.

“Both sides agreed that while there may be differences in our preferred approaches, we will continue a constructive process to find a solution and come to a conclusion as soon as possible,” Carney said.

Talks will continue among staff and lawmakers over the Thanksgiving break. Leaders are expected to reconvene the following week and hope to have made concrete progress to build confidence among consumers ahead of the holidays and in the markets, which have grown increasingly jittery since the elections at the prospect of an impasse.

After returning to the Capitol, Reid said he planned to have more talks with key players in coming days.

“It was a good meeting. There was no harsh words. There was a general feeling that we need to get something done, and both sides are going to have to give,” Reid said.

Obama at the start of the meeting called on the group to come together.

“I want to welcome the congressional leadership here and thank them for their time,” he said at the top of the meeting in the Roosevelt Room. “I think we’re all aware that we have some urgent business to do. We’ve got to make sure that taxes don’t go up on middle-class families, that our economy remains strong. That’s an agenda that Democrats and Republicans and independents, people all across the country share. 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 also wished Boehner — who turns 63 on Saturday — a happy birthday.

“We’re not going to embarrass him with a cake because we didn’t know how many candles were needed,” the president quipped.

“Yeah, right,” Boehner said with a smile. The two men, seated next to each other, then shook hands.

Obama did not sing happy birthday, nor the semifamous “Boehner Birthday song,” which can be found on YouTube. But he did present the speaker with a pricey bottle of Italian wine.

Vice President Joseph R. Biden Jr., Treasury Secretary Timothy F. Geithner, White House Chief of Staff Jacob J. Lew and economic adviser Gene Sperling also attended the meeting.

Meanwhile, a bipartisan group of lawmakers were renewing their push for a comprehensive deficit reduction deal in hopes of giving congressional leaders political space to make hard compromises.

Rep. Heath Shuler, D-N.C., is seeking signatures on a letter to party leaders that calls for $4 trillion in deficit reduction, derived from new revenue and spending cuts, including to entitlement programs. He held a meeting Friday morning to begin building support.

“Everything is on the table,” Shuler said. “We should be able to send a really strong message to our leaders to let them know to come up with a really large deal and that we’ll have their back.”

Shuler signaled he was seeking to replicate the coalition of 100 bipartisan lawmakers that signed a letter last November urging members of the Joint Select Committee on Deficit Reduction to craft a $4 trillion deficit reduction package over a decade. Shuler said 18 lawmakers attended the meeting and that he was just beginning to collect signatures.

“We all want to go big and we all want to do this right the first time,” Shuler said. “The thing we don’t want to do is do something small or kick the can down the road.”

Republican Reps. Steven C. LaTourette of Ohio and Mike Simpson of Idaho, who were involved in last year’s “go big” push, were also spotted leaving the meeting. LaTourette and Shuler are retiring at the end of this Congress.

On Wall Street, stocks rallied, but bonds were down, in the initial reaction to leaders’ optimism about reaching a deal on the fiscal cliff.

Alan Ota and Ben Weyl contributed to this report.

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