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Obama moves on fiscal cliff offer

President Barack Obama has softened his demand for higher taxes at upper income levels and agreed to curtail future inflation adjustments for recipients of Social Security pensions as part of accelerating talks with Republicans to avoid a "fiscal cliff," people familiar with the talks said Monday.

The manoeuvring is aimed at reaching an agreement to rein in deficit spending before an automatic year-end hike in taxes for nearly all wage-earners hits, as well as deep spending cuts in defence and in domestic programs across the government. Economists have warned that the combination of the two, set to begin at year's end, could send the economy into recession.

Speaking a few hours after Obama and House of Representatives Speaker John Boehner met at the White House, these people said the president was now seeking higher tax rates beginning at incomes over $400,000 for couples, down from the $250,000 level that was a cornerstone of his successful campaign for re-election.

Obama's willingness to reduce future cost-of-living increases in Social Security pensions and numerous other government programs marked a clear a concession to Boehner, although it came with an asterisk. The president wants lower-income recipients to be exempt from any loss from scaling back future pension cost of living increases, these officials said.

Nor did Obama's offer include raising the age of Medicare eligibility from 65 to 67, a Republican goal that has drawn particularly strong objections from Democratic liberals who cherish the federal health care program for the elderly.

Several officials also said during the day that Boehner's offer late last week to accept higher tax rates, a first in the talks, included provisions that would mean higher taxes on investment income and dividends earned by wealthy Americans.

A spokesman for Boehner declined comment on the tax proposals.

 



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