The first serious proposals from the White House to solve the looming "fiscal cliff" of tax rises and budget cuts appear to have been rejected out of hand by Republican leaders in Congress.
Treasury secretary Timothy Geithner is reported to have offered a set of proposals that include increasing tax rates on the wealthy, a one-year postponement of scheduled cuts in defence and domestic spending, and $400bn in savings from Medicare and other entitlement programmes.
The proposals from the White House – the first to use hard numbers – include a $1.6tn tax increase, a $50bn stimulus package and new presidential powers to raise the federal debt limit without congressional approval.
But based on public and private comments after their meetings, both House speaker John Boehner and Senate minority leader Mitch McConnell – the two most senior Republicans in Congress – brushed aside the proposals as incomplete.
Boehner said later: "No substantive progress has been made in the talks between the White House and the House over the last two weeks."
Boehner is said to have demanded matching spending cuts in return for raising the federal debt ceiling, which limits the total amount the US government can borrow. The Congressional Budget Office estimates it will be breached in February or March next year.
USA Today reports that three Republican congressional aides familiar with the president's offer cast it as an "outrageous" proposal that surprised the speaker and has set back negotiations on how to avoid the fiscal cliff coming at the end of the year, when all of the Bush-era tax rates expire and the first of $1.2tn in spending cuts over 10 years are triggered.
The automatic budget cuts that are at the heart of the fiscal cliff stem from the difficult negotiations over the debt ceiling in 2011.
Harry Reid, the Democratic majority leader in the Senate, was dismissive of Boehner's remarks. "I don't understand his brain," he said after his own meeting with Geithner.
Reid added: "Democrats are all of the same page. For two weeks we have been waiting for a serious offer from Republicans."
Obama and Boehner spoke for 15 minutes on Wednesday night. Obama had spent part of the day discussing the crisis with business leaders.
On Thursday, Obama had lunch with his former presidential rival Mitt Romney, amid rumours that he was considering Romney's proposal to cap tax breaks for the rich. The White House said the lunch was private.
Boehner's suggestion that a compromise was far from certain were echoed by other Republicans. "It is not going to happen soon," senator John Barrasso told Fox Business News.
Stock markets largely shrugged off the latest posturing from Washington, remaining broadly flat at lunchtime.
Despite the public comments from Boehner, a mall but growing number of Republicans in the House of Representatives believe tax hikes on the rich will be part of a final deal to resolve the so-called fiscal cliff.
"I wouldn't have a problem with letting those tax rates [for the rich] go up," provided they are coupled with spending cuts, Representative Mike Simpson of Idaho told Reuters on Thursday.
A similar sentiment expressed by about a half a dozen House Republicans in recent days will likely increase pressure on their party's congressional leadership to reach a bipartisan agreement with Obama and his fellow Democrats.
Simpson, a seven-term veteran, said that raising taxes on the rich "wouldn't be my preferred way to do it. But elections have consequences," referring to Obama's re-election earlier this month.
Another senior Republican lawmaker, who asked not to be identified, told Reuters that a Democratic bill, which passed the Senate in July and would raise income taxes on families with net incomes above $250,000, could pass his chamber if it got to the floor.
The lawmaker said he was confident, however, that Boehner would not allow this bill to be brought to the House floor for a vote, explaining: "It may be popular" but "it's class warfare."
Republican Representative Steve King said he and fellow conservatives could live with raising taxes. "Conservatives might be able to figure how they can go home and rationalise a vote that included a revenue increase and or a tax rate increase," King said.
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