Boehner downbeat, ‘disappointed’ over tax talks

WASHINGTON -- House Speaker John A. Boehner struck a gloomy note Thursday after meeting with Treasury Secretary Timothy Geithner as Democrats hold firm that taxes for the wealthy must rise as part of a year-end budget deal.

“I’m disappointed where we are,” the Ohio Republican said after the morning meeting with Geithner and other administration officials in the Capitol.

The Republican speaker spoke Wednesday night with President Obama -- a conversation described as “curt” by one source -- amid a growing sense that the talks are at a stalemate. The conversation between the two was 28 minutes long, according to the White House.

“It was frank and direct and a good conversation,” said White House spokesman Jay Carney.

Boehner characterized the president as “direct and straightforward.”

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As the deadline narrows toward the year-end “fiscal cliff,” neither political party appears willing to budge from their positions, both believing they have a mandate from voters, who returned divided government to Washington. Failure for Congress and the White House to reach agreement would result in a $2,200 annual tax hike on average Americans and massive spending reductions beginning Jan. 2.

The financial markets signaled their displeasure with the stalemate Thursday morning, then rebounded later in the day.

Obama sent Geithner, his top budget negotiator, to resume high-level talks with congressional leaders two weeks after an initial meeting at the White House set parameters for a two-part deal. Days of staff-level negotiations in the time since have produced no tangible results.

“Republicans know where we stand,” said Senate Majority Leader Harry Reid of Nevada after his own meeting with Geithner and the administration officials Thursday. “We’re still waiting for a serious offer from the Republicans.”

Both sides had agreed to a framework that would provide a down payment of spending cuts and revenues this year, and establish targets for broader tax-and-spending reforms to be worked out through the legislative process in 2013.

Democrats said their offer is on the table -- a down payment of $900 billion in new revenue from allowing the upper-end tax rates to expire, as Obama proposed, for those couples earning more than $250,000 or $200,000 for single households. The top tax rate would increase, to 39.6%, and the 15% tax rate on dividends would also rise, to 20%.

Under Obama’s proposal the other tax rates would remain at today’s level, averting the $2,200 average tax hike that would come at year’s end if they are allowed to expire.

Boehner, though, laid the blame for the stalemate squarely on Obama and his allies on the Hill.

Republicans want cuts to Medicare, Medicaid and other government programs, and believe the nation’s deficit problems are on the spending side of the ledger. They are willing to consider new revenue sources, but refuse Obama’s proposed tax hike on the rich.

Boehner has sought to capitalize on the divisions among Democrats over how far to trim safety-net programs.

“Democrats have yet to get serious about spending cuts,” Boehner said.

Democrats, though, said they are willing to consider budget cuts, but if Republicans want to scale back the safety net, they should propose that as part of the negotiations.

Reid said about Boehner: “I don’t understand his brain.”

Democrats were buoyed Thursday as several rank-and-file Republicans have expressed a willingness to accept Obama’s offer.

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lisa.mascaro@latimes.com

christi.parsons@latimes.com

Twitter: @LisaMascaroinDC

Twitter: @Cparsons