Fiscal cliff looms large after Boehner initiative fails

The sudden collapse of house speaker John A Boehner's Plan B for averting most year-end tax increases has left president Obama and congressional leaders facing a daunting choice: compromise in the few days remaining before tax hikes and spending cuts kick in, leave it at that and fall off the so called ''fiscal cliff.''

Obama appeared in the White House briefing room late yesterday to call on congressional leaders to at least prevent income tax increases on household income of less than $250,000, continue long-term unemployment benefits and delay the mandatory spending cuts set to begin in January.

He said he would not mind being called a hopeless optimist, but he actually still thought it could be done. He later left with his family to spend Christmas in Hawaii.

The president's plea comes as a retreat from the much broader deal he had sought during private talks with Boehner, which proved infructuous this week with the Ohio Republican pursuing a separate course. By suggesting last-ditch action on priorities that were most important to Democrats, Obama would not likely attract an enthusiastic GOP response.
 
Earlier he had talked with Boehner on telephone. He had also met at the White House with senate majority leader Harry Reid (D-Nevada) - a partner who could be depended on to strike a deal in the senate. All sides are expecting to return to Washington next week.

Obama, backed by Congressional Democrats, has been proposing now what he had proposed for four years - that the Bush tax rates be extended permanently for all income below $250,000 a year.

While negotiating with Boehner he had tentatively agreed to raise that threshold to $400,000, and Congressional Democrats yesterday said they would even raise it further to $500,000 if it would seal a deal with Republicans.