WASHINGTON (Reuters) - House of Representatives Speaker John Boehner said on Thursday that "fiscal cliff" talks with the White House had made no substantive progress and criticized President Barack Obama and Democrats for failing to get serious about including spending cuts in a final deal.
Boehner said he was "disappointed" after a phone call with Obama on Wednesday night and a meeting with Treasury Secretary Timothy Geithner on Thursday moved the two sides no closer to an agreement to avert the tax hikes and spending cuts that will be triggered at the start of 2013 unless Congress intervenes.
"I'm disappointed in where we are and disappointed in what's happened over the last couple of weeks," Boehner, of Ohio, told reporters after a private session with Geithner at the Capitol.
"No substantive progress has been made in the talks between the White House and the House over the last two weeks," he said. "There's been no serious discussion of spending cuts so far, and unless there is, there's a real danger of going off the fiscal cliff."
Markets dipped briefly into negative territory on Boehner's comments, continuing a pattern of gyration based on the latest utterance or headline about the outlook for an agreement to avert the fiscal cliff.
The tone was in sharp contrast to the one expressed on November 16, the last time Obama met with congressional leaders. Boehner then stood next to Democratic leaders and voiced optimism they could find common ground in fiscal cliff negotiations.
Complicating the debate on Thursday was a renewed fight over raising the U.S. debt ceiling. That explosive issue, which could have been handled separately in the spring, was thrust into the fiscal cliff fray on Thursday in an exchange between Republicans and Democrats.
Boehner said any debt limit increase needed to be matched or exceeded by spending cuts to be proposed by Obama as part of the cliff negotiations.
' DEEPLY IRRESPONSIBLE '
White House s pokesman Jay Carney responded by demanding that Congress go ahead and raise the debt ceiling as part of any year-end deal to avoid the cliff. T o do otherwise, he said, would be "deeply irresponsible."
The last partisan fight over the nation's borrowing limit in 2011 was settled by a law that led directly to the fiscal cliff and to a downgrade of the government's credit rating.
Geithner, Obama's top negotiator in the talks, met with congressional leaders from both parties at the Capitol as the end-of-year deadline approaches to avoid the onset of $600 billion in tax hikes and spending cuts that analysts warn could push the U.S. economy back into recession.
The immediate issue is whether the tax cuts that originated in the administration of former President George W. Bush should be extended beyond December 31 for all taxpayers including the wealthy, as Republicans want, or just for taxpayers with income under $250,000, as Obama and his fellow Democrats want.
Republicans have said they are willing to consider new ways to raise revenue as long as Democrats and Obama agree to accompany it with significant spending cuts, particularly to entitlement programs like the government-sponsored Medicare and Medicaid healthcare plans.
"Without spending cuts and entitlement reform, it's going to be impossible to address our country's debt crisis. Right now, all eyes are on the White House," Boehner said.
Boehner said Geithner and the administration had not offered any new plans during the meeting to break the impasse, while Senate Democratic leader Harry Reid said Democrats were still waiting for a "reasonable" proposal from Republicans.
Carney said the president had put forward "very specific spending cuts," including some in the entitlement healthcare programs, but had not seen any movement from Republicans.
CRACKS IN REPUBLICAN RANKS
Despite a few cracks in Republican ranks, most notably from Republican Representative Tom Cole of Oklahoma, neither side has budged significantly in recent weeks from its position, leaving the markets and political analysts alike to grasp at wording nuances.
"I think unfortunately it seems pretty clear that the market is trading very much off the reading of the tea leaves on how these fiscal cliff negotiations are going," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.
In the absence of progress, or any realistic understanding as to when or if Republicans and Democrats might avert the cliff or come up with some deficit reduction agreement, prodding has started to come on a regular basis from business leaders as well as Federal Reserve officials.
New York Fed President William Dudley and Richard Fisher of the Dallas Fed, highlighted the problems that U.S. lawmakers were causing for both hiring and the economy with each day they fail to strike a deal to avoid a pending fiscal crisis.
Dudley said on Thursday that if it is not addressed, the economic contraction is likely to be larger than normal because interest rates are so low.
The post-election lame-duck session of Congress also has made clear that until the two sides get over the immediate tax issue, they will not be able to move forward on the serious discussions they desire on longer-term deficit reduction and tax reform.
Keeping the nation in suspense down to a white-knuckled deadline has become the rule rather than the exception for Congress in recent years.
Whether the risk has been a government shutdown or, as in the events that led to the fiscal cliff, default for failure to raise the U.S. government's borrowing power, Republicans and Democrats have needed the pressure of time and possible disaster to bring them together.
(Additional reporting by Rachelle Younglai, Thomas Ferarro and Kim Dixon; Writing by John Whitesides and Fred Barbash; Editing by Peter Cooney)
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