By Richard Cowan and Jeff Mason
WASHINGTON (Reuters) - President Barack Obama and House of Representatives Speaker John Boehner held a "frank" face-to-face meeting on Thursday in an effort to break an impasse in talks to avert the "fiscal cliff" of steep tax increases and spending cuts.
With an end-of-year deadline looming, the two leaders talked at the White House as frustration mounted over the recent lack of progress in negotiations that had become bogged down in a daily round of finger-pointing.
Aides on both sides used similar language to describe the 50-minute meeting, calling it "frank" and repeating that lines of communication remained open.
The meeting, also attended by Treasury Secretary Timothy Geithner, was announced after frustration broke out on both sides at a lack of progress and U.S. stocks turned negative due to fears the economy could dip into recession again if politicians fail to break the gridlock in Washington.
At times raising his voice, Boehner criticized Obama earlier in the day for putting jobs and the economic recovery at risk by insisting on raising tax rates for the wealthiest 2 percent.
White House spokesman Jay Carney responded by reaffirming Obama's commitment to raising the top rates and complaining there had been no movement from Republicans on that crucial topic.
"What we have not seen from the Republicans is any movement at all on the fundamental issue," Carney told reporters. "Republicans need to accept the fact that rates will go up on the top 2 percent."
In an interview with a Minnesota CBS television affiliate, Obama said he was hopeful of getting a deal and willing to make more spending cuts as long as revenue from higher tax rates for the rich was part of the deal.
"I'm willing to do a lot more cuts in spending. We also need to pair it up with a little more revenue," he told WCCO television.
At a meeting earlier on Thursday, Obama's top economic adviser, Gene Sperling, delivered a downbeat message to Democratic senators about the status of the fiscal cliff talks.
A Democratic aide described the presentation as "bleak," saying Sperling told the group of senators that "we don't have anywhere to go until Republicans move on (income tax) rates."
Republicans offered similar gloom. "Based on the White House's current approach, it looks like we're in for a protracted conflict until the snow melts," Illinois Representative Peter Roskam said in an interview. "They (the White House) are pushing us over the cliff," said Roskam, a member of Boehner's leadership team.
Economists say failure to reach an agreement before January 1 could push the country back into recession. The main hurdle is the expiring tax cuts, which Obama wants extended for all but the rich and Boehner wants extended for everyone.
But with positions seeming to harden, both sides also emphasized their differences on Obama's request for permanent authority to increase U.S. borrowing as part of a fiscal-cliff agreement and on Republican calls for an increase in the eligibility age for recipients of the Medicare healthcare program.
At a news conference, Boehner occasionally raised his voice in criticism of Obama's bottom-line insistence on raising tax rates on the rich.
"Raising tax rates will hurt small businesses at a time when we're expecting small businesses to be the engine of job creation in America," said Boehner, who used a chart to illustrate his point that curbing spending increases was the key to deficit reduction.
If Obama persisted on a path of higher spending and higher taxes, he said, "this chart is going to look a lot worse."
Afterward, his spokesman said Boehner would return to his home state of Ohio on Friday for the weekend, but was available if there were more talks. "Ohio has both cell phone service and airports," spokesman Michael Steel said. "It won't be a problem."
A seven-day rally in world shares came to a halt and commodity prices slipped on Thursday after negotiations over the fiscal cliff appeared to stall.
Today there's a certain sense that both sides are still apart," said Gordon Charlop, managing director at Rosenblatt Securities in New York, describing trading as "tweaking" while investors watch Washington's back-and-forth drama.
While Republicans fumed, Obama planned to continue his public-relations offensive with a round of interviews with anchors from local television stations. He was interviewed by ABC's Barbara Walters two days ago.
A flurry of new polls showed strong support for Obama's position. According to a Wall Street Journal/NBC survey, three-quarters of Americans said they would accept raising taxes on the wealthy to avoid the cliff. Even among Republicans, some 61 percent said they would accept tax increases on high earners.
'REALITY SHOULD SET IN'
A Pew Research Center poll showed Obama's approval rating rising and 55 percent saying he was making a serious effort to engage in the fiscal talks, while just 32 percent said Republicans were serious about a deal.
Senate Democratic leader Harry Reid, citing the polls, said Boehner "can't ignore the people forever" on the tax issue. "At some point, reality should set in," he told reporters.
The polls have put Republicans in a difficult negotiating position, and pressure has grown on Boehner in recent weeks from the right and left. Some Republicans have expressed a willingness to give in on higher tax rates in exchange for deeper spending cuts, while conservatives have demanded that Boehner stand firm.
"I'm not concerned about my job as speaker," Boehner, who faces re-election to the leadership post in January, told reporters.
Boehner also dismissed any notion that Republicans would agree to giving Obama more authority on the debt ceiling.
"Congress is never going to give up our ability to control the purse," Boehner said. "The debt limit ought to be used to bring fiscal sanity to Washington."
A group of 72 House Democrats urged Obama to reject Republican calls to raise the Medicare eligibility age.
Senator Dick Durbin of Illinois, the second-ranking Democrat in the Senate, told reporters he was told by the White House that raising the eligibility age for qualifying for Medicare benefits was not in the mix anymore.
He said that raising the eligibility age "creates some serious issues for a lot of people who may be caught in the gap between retirement and eligibility. Where are they going to get health insurance? Many of them are sick people."
(Additional reporting by Kim Dixon and Rachelle Younglai; Writing by John Whitesides; Editing by Alistair Bell and Peter Cooney)