Impasse on 'Cliff' Threatens Holiday, Sandy Relief

PHOTO: President Barack Obama gestures as he speaks to the media during a visit with to Falls Church, Va., Thursday, Dec. 6, 2012 and House Speaker John Boehner of Ohio gestures as he speaks during a news conference on Capitol Hill in Washington, Friday,
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President Obama and House Speaker John Boehner will meet at 5 p.m. at the White House in the latest attempt to break through an impasse in their "fiscal cliff" talks. But in Washington there is increasing pessimism about a deal by Christmas and now threatening to sidetrack billions in federal aid for victims of superstorm Sandy.

"It's still a work in progress," Obama told reporters today of the prospect of a deal.

After weeks of public posturing and private negotiations, both sides remain firmly dug in with their opposing positions on tax hikes and spending cuts for deficit reduction.

"The president wants to pretend spending isn't the problem," Boehner said at a morning press conference. "That's why we don't have an agreement."

House Republicans are demanding significant changes to entitlement programs to curb spending, which Democrats flatly oppose. The White House, invoking the president's re-election and public opinion polls on its side, still insists there will be no deal without a tax-rate increase on the top 2 percent of U.S. income-earners.

"Until the Republicans realize this, are willing to do what is right, we are going nowhere," Senate Majority Leader Harry Reid said.

The gridlock on how to best reduce the deficits and debt threatens to derail another pressing piece of business at hand: the White House's $60 billion emergency-relief request for states devastated by Sandy.

Some Republicans are balking at the size of the request -- which was endorsed by the governors of the affected states, including New Jersey Republican Gov. Chris Christie -- noting that its price tag would nearly wipeout any deficit savings Democrats are seeking next year by raising tax rates on the rich.

Other lawmakers have said the aid package should be offset with a fresh batch of spending cuts, which could be hashed out in committee hearings early next year. FEMA still has $5 billion in its Disaster Relief Fund, they say, enough to last until March.

Congressional leaders on both sides warned members Wednesday to prepare for a working Christmas in Washington unless a compromise can be reached soon. The "fiscal cliff" hits in 19 days, triggering a cascade of automatic tax hikes and deep spending cuts that could thrust the economy back into recession.

Obama and Boehner have traded a series of proposals over the past few days, speaking at least once by phone this week. The president lowered his desired target for new tax revenue from $1.6 trillion to $1.4 trillion; Boehner has indicated his willingness to raise more than the $800 billion he put on the table.

But the Ohio Republican said today that the two sides are nowhere near a deal.

"More than five weeks ago, Republicans signaled our willingness to avert the 'fiscal cliff' with a bipartisan agreement that is truly balanced and begins to solve our spending problem," Boehner said. "The president still has not made an offer that meets these two standards."

Obama predicted Monday that Republicans will ultimately accept tax hikes for the wealthy and signaled new willingness to make "tough" spending cuts. But he did not offer specifics.

"If the Republicans can move on that [taxes], then we are prepared to do some tough things on the spending side," Obama told ABC's Barbara Walters this week. "Taxes are going to go up one way or another. And I think the key is that taxes go up on high-end individuals."

In the event both sides cannot reach a broad deal, there is still some optimism about a last-ditch effort by both parties to prevent an income tax hike on 98 percent of earners.

The Senate has already passed a measure extending tax rates for families earning $250,000 a year or less. The House could decide to act on that, and nothing more, if the impasse reaches the 11th hour.

The latest ABC News-Washington Post poll shows more Americans back Obama over Boehner in the budget talks by a 2-to-1 margin. But the numbers are hardly overwhelming.

Forty-nine percent approve of Obama's handling of the "fiscal cliff," while 42 percent disapprove. Just 25 percent approve of Boehner's handling of the situation, although that is at least in part because many more people are in the dark about his efforts, according to the poll.

ABC News' Jonathan Karl contributed reporting.

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