US President Barack Obama speaks before Speaker John Boehner (R-OH) Secretary of the Treasury Timothy Geithner (3rdR) and other cabinet members during a meeting on November 16, 2012 in Washington,DC. Obama said Friday that Democrats and Republicans needed to make 'tough compromises' in order to overcome divisions over deficit reduction and avoid the fiscal cliff. AFP PHOTO/TOBY JORRIN (Photo credit should read TOBY JORRIN/AFP/Getty Images)
Any progress in fiscal cliff talks?
04:22 - Source: CNN

Story highlights

NEW: Obama says extending tax cuts for all but the wealthiest "the best thing for the economy"

Like the speaker's office, the White House says "lines of communication remain open"

Boehner says "spending is the problem;" Democrats say the rich should pay more

Stocks fall amid uncertainty about the political impasse over the fiscal cliff

Washington CNN  — 

Facing a looming deadline to avoid the fiscal cliff, President Barack Obama and House Speaker John Boehner met Thursday for their first face-to-face talk in four days.

Boehner arrived for the previously unscheduled meeting just after 5 p.m. ET, a few hours after claiming Obama had failed to offer a serious compromise to prevent the fiscal cliff’s automatic tax hikes and spending cuts set to take effect in less than three weeks. He spent about 50 minutes in the White House before returning to his office.

A White House official and Boehner’s spokesman then issued near identical statements, calling the Oval Office meeting “frank” and saying the “lines of communication remain open.”

The meeting didn’t spur Boehner to change his plans to return to Ohio on Friday, one of the speaker’s aides said. The House is scheduled to end its current session that day, but Majority Leader Eric Cantor has told lawmakers they could be working longer than that with the fiscal cliff still in limbo.

The inability to reach a deal, thus far, reflects Democrats and Republicans’ underlying divisions about the size of government and how much the wealthiest Americans should pay in taxes.

For all the public posturing and private talks, there are fears failing to avert a crisis – which has been two years in the making – could spur another recession. The possibility is spooking holiday shoppers and investors, with stock values falling due to the fiscal uncertainty despite otherwise upbeat economic news.

Boehner on Thursday said the president hasn’t signed on to a plan that “is truly balanced and begins to solve our spending problem.” Republicans have said 71% of every tax dollar now goes to support Social Security, Medicare and Medicaid, as well as paying interest on the national debt, claiming the cost of these items would equal all federal tax revenue in 2026 unless changes are made.

“The president wants to pretend spending isn’t the problem,” said Boehner. “That’s why we don’t have an agreement.”

One simple, controversial fiscal cliff fix

Minutes before he spoke, House Democratic leader Nancy Pelosi argued Obama and Congress already cut spending in budget battles of the past two years. Simply cutting more, she said, could hurt the economy.

“You’re not going to reduce the deficit by … only cutting your way to it because you will cut the prospects for job creation, which produce revenue,” Pelosi said.

At the White House, spokesman Jay Carney complained Republicans haven’t offered details on which deductions or loopholes they would eliminate to raise revenue. Regardless, he reiterated Obama will only agree to a deal if it involves tax rates going up for the top 2% of Americans and extending tax cuts for all others – a proposal some Republicans have said they’re open to, but not Boehner.

“That’s the best thing for the economy, the best thing for American families,” Obama told CNN California affiliate KCRA of his plan. “That will take the edge off things. We’ll still have to deal with some deficits and debt problems, but it means 98% of Americans, 97% of small businesses will not see their taxes go up.”

By the numbers: Fiscal cliff

The two sides have exchanged counteroffers that include two shifts by the White House. Democratic sources said Obama lowered his revenue demand from $1.6 trillion to $1.4 trillion and also added changes to the corporate rate to his proposal involving income taxes.

Obama and Democrats want Boehner to hold a vote on the president’s tax plan to extend tax cuts for income up to $250,000 for families, which the Senate passed. Some House Republicans have said they’d support the measure, which the Senate passed, and Boehner avoided a direct answer when asked Thursday about a possible vote.

Boehner argues that raising taxes on high-income earners “will hurt small businesses.”

Some small business owners interviewed by CNNMoney said they’d continue with plans to expand even if the Obama proposal gets passed and raises their taxes. They hate higher taxes, but say they’ll endure it. And the Business Roundtable, an association of CEOs of major corporations, dropped its opposition to the Whit House plan on Wednesday.

“If your business is good, you’ll grow it. We’ll figure out a way,” said Chelsea Sloan, who started the Uptown Cheapskate retail franchise. “Business owners who say they’ll stop hiring if tax rates go higher are blowing smoke.”

Sen. Ron Johnson conceded Wednesday on Fox Business Network that Obama “holds all the cards” since he can veto any bill. “So we may have to do a fallback position where we’re just trying to minimize the damage,” the Wisconsin Republican said.

At the same time, Johnson said Obama and fellow Democrats haven’t shown they intend “to limit the rate of growth in government.”

How people are prepping for the fiscal cliff

Democrats consider entitlement programs to be the foundation of the social contract with Americans and therefore question pushes to cut them. Instead, they insist the programs can be strengthened through improved efficiency and other reforms, such as the $700 billion in Medicare savings under Obama’s 2010 health care reform law.

Is the tea party ready to deal on fiscal cliff?

Polls consistently show the public favors Obama’s position of raising taxes on wealthy Americans in order to minimize cuts.

Nearly half of Americans – 49% – approve the president’s handling of the talks, compared with 25% who say Boehner is doing a good job, according to an ABC News/Washington Post poll released Wednesday.

Meanwhile, a Bloomberg National Poll found nearly two-thirds of respondents, including nearly 50% of Republicans, believe Obama’s re-election gave him a mandate to seek higher taxes on the wealthy.

Businesses hate higher taxes but say they’ll endure it

Regardless of which side of the debate citizens fall, experts agree most everyone will be affected if a deal isn’t struck. Two former Senate majority leaders said Thursday both sides must be ready to compromise.

“The simplest way to put it is that we’re at 24% spending, we’re at 16% revenue,” said Tom Daschle, the former Democratic senator from South Dakota. “We’ve got to bring those two closer together, and that’s how you get a balanced budget, and ultimately that’s how you get fiscal responsibility. … It can be done.”

To Trent Lott, the former Republican senator from Mississippi, it comes down to the principal negotiators.

“There’ll come a moment when the speaker … and the president will have to make a decision,” Lott said. “But they need to do it in concert.”

“It’s like directing the orchestra. You’ve got to have the winds and the brass come together, and they’re not quite there.”

How will the fiscal cliff affect you?

CNN’s Dana Bash, Paul Steinhauser, Caitlin Stark, Deirdre Walsh, Jessica Yellin, Ashley Killough and CNNMoney’s Jose Pagliery contributed to this report.