Treasury Secretary Timothy Geithner says any potential deal will have to include a tax hike on the upper 2 percent of income earners. But Geithner says the biggest obstacle is Republicans who refuse to budge. Anna Werner reports on how close the parties are in reaching a deal.
After the 2010 elections that propelled 69 new Republican lawmakers - many of them backed by the tea party - into Congress, they felt emboldened to change Washington and stick to their anti-tax, lower government spending principles. Their reasons were sound. They had the support of the public who voted in Republicans at record numbers in the House and diminished the Democrats' ranks in the Senate.
The public tide seems to have turned, especially as it relates to the so-called "fiscal cliff." A new poll by Gallup found that 70 percent of the 1,069 adults surveyed want lawmakers to compromise on the pending economic quandary. Democrats, Republicans and independents overwhelmingly back cooperation. That is an increase from even just a week ago when 62 percent wanted to see compromise.
But will the lawmakers listen?
Well, at least they're talking. As has been widely reported, President Obama and House Speaker John Boehner met for the first time in nearly a month on Sunday. That meeting came after a phone call between the two just a few days prior. And on Monday, the president phoned Senate Majority Leader Harry Reid. Perhaps more importantly, aides to both leaders resumed negotiations this week. Few details from the meetings have been released, which CBS News political director John Dickerson said is a good sign that a compromise might be on its way.
"Only until everybody gets their bending sort of aligned can they present them to their sides," he said.
The difficult issues: taxes for the Republicans and entitlement spending for the Democrats. Democrats insist that the parameters of a deal must revolve around raising the tax rate on the wealthy; Some Republicans, including Boehner, have indicated they'll listen to calls for a tax increase in exchange for lowering spending on programs such as Medicare and Medicaid.
Reuters reports today that a possible path to reaching a deal is to raise tax rates on the wealthy now and put in place a framework to work out next year for broader tax reform that takes caps deductions and loopholes, a general proposal backed by many Republicans.
There has also been discussion about raising the top tax rate but changing the line defining the wealthy to a level higher than $250,000, raising the top tax rate not from 35 to 39.5 percent but somewhere in between. Both Mr. Obama and Boehner subtly indicated - albeit barely - as much in recent public statements.
An increase to the debt ceiling is also being considered, according to Reuters.
Republicans, however, insist that cost-saving measures be made to entitlement health programs, especially Medicare. The president has proposed $350 billion worth of cuts while Boehner has proposed about $600 billion to the health program for seniors. One possibility is raising the age to receive benefits from 65 to 67.
Despite subtle hints at possible movement, Boehner and Mr. Obama mostly continue to publicly espouse their positions. Speaking to supporters in Michigan Monday, the president said he "won't compromise" on some things.
"I'm not going to have a situation where the wealthiest among us, including folks like me, get to keep all our tax breaks, and then we're asking students to pay higher student loans," he said.