WASHINGTON — Congressional leaders huddled on Tuesday to see if a U.S. deficit-cutting deal is possible as negotiators sought a way to bridge a divide over tax increases and benefit cuts.
Democrats and Republicans on a 12-member "super committee" have less than a week to come up with a plan that would cut $1.2 trillion over 10 years.
But the two sides remain far apart on how much of that total should consist of tax increases and how much should come from trimming retirement and health benefits. Any agreement would likely challenge orthodoxies on the left and the right as the 2012 election season heats up.
The top Republican in Congress, House Speaker John Boehner, met with the top Democrat, Senate Majority Leader Harry Reid, to see if a deal is possible at this point, aides said.
Reid declined to comment after the 40-minute meeting, held in Boehner's elaborate office in the Capitol.
A group of more than 100 Republicans and Democrats had planned a rally for Wednesday to urge super committee members to aim higher, though it was postponed due to a scheduling conflict. Independent budget experts say Congress needs to trim its annual budget deficits by roughly $4 trillion over 10 years to keep the national debt at a manageable level.
"Time is short but not so short that agreement cannot be reached," said Representative Steny Hoyer, the No. 2 House Democrat who had organized the rally.
The panel has not held a full meeting for two weeks, though members have been working in smaller, informal groups. Members face a Nov. 23 deadline, though a deal will need to be reached before then to give budget analysts time to crunch numbers.
Congress already faces rock-bottom approval ratings after a bruising year of budget battles that have pushed the federal government to the brink of default and prompted a first-ever downgrade of U.S. debt.
SCATTERED SIGNS OF PROGRESS
Failure by the super committee could further undermine public and investor confidence that Washington has the stomach and political will to make tough fiscal choices at a time when seemingly intractable debt burdens in Greece, Italy and other countries are rattling world financial markets.
But failure by Washington to act would not necessarily prompt another debt downgrade because automatic spending cuts totaling $1.2 trillion would kick in, falling equally on military and domestic programs.
Analysts have voiced concern over sharp cuts in spending -- whether forced upon Congress or through the automatic triggers -- could slow already tepid economic growth, which could filter through to markets.
There have been some signs of progress in recent weeks as Republicans have moved off their staunch anti-tax stance and Democrats have shown a willingness to rein in benefit programs like Medicare that are projected to blow a hole in the budget over the coming decades.
No new proposals have emerged since the two sides floated -- and rejected -- rival plans last week. Republicans continued to ask Democrats for more deficit-reduction ideas, while Democrats said they wanted more details on how much new tax revenue they would be willing to accept.
The super committee's top Republican, Representative Jeb Hensarling, has suggested that the committee could postpone details of a tax-code overhaul until next year.
Democrats would want a "down payment" of some tax increases now, such as ending breaks for oil and gas producers, before they would sign off on a plan that pairs spending cuts now with the promise of tax increases in the future.
Aides said there was no sign of a deal, but also no sign of a stalemate.
Even if the panel reaches a deal, Reid and Boehner would have to ensure that it has enough support to pass Congress. Boehner would face pressure from a conservative flank that has refused to back other budget agreements this year because they contained tax increases.
Republican Representative Patrick McHenry rejected any talk of tax increases. "It would be a bad deal for the American people and wouldn't get through this Congress," he said after Hensarling briefed Republicans on the state of the talks.
The two congressional leaders were key players in an April budget deal that avoided a partial government shutdown and describe each other as friends.
Boehner told reporters he was "convinced" that if the panel reaches an agreement it can pass Congress. (Additional reporting by Thomas Ferraro and Andy Sullivan; writing by Andy Sullivan; Editing by Deborah Charles and Philip Barbara)
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