Signs of a thaw emerge in 'fiscal cliff' talks

• Boehner's offer was for higher tax rates for people making more than $1M a year
• Republicans seeking reduced entitlement spending
• GOP plan also calls for raising the Medicare eligibility age

WASHINGTON — After weeks of stalemate, signs of potential progress have emerged in talks to avoid the year-end "fiscal cliff" of tax increases and $1.2 trillion in federal spending cuts over the next 10 years.

In talks with President Obama, Republican House Speaker John Boehner offered to back raising the income tax rates for people making $1 million or more if Obama agreed to significant cuts in entitlement program spending, according to two sources close to the negotiations. They spoke on condition of anonymity because they were not authorized to speak publicly.

Obama rejected that offer, the sources said, but it was the first sign that Boehner was willing to endorse raising tax rates for anyone. Boehner has rejected previous requests for higher tax rates, saying instead he favored eliminating tax loopholes to broaden the tax base and raise about $800 billion over 10 years.

The president has called for higher tax rates for those making $200,000 as individuals or couples making $250,000 or more.

Obama and Boehner last met Thursday evening for about 50 minutes. At the time, neither the White House nor Boehner disclosed details of that discussion. Obama called the talks a work in progress.

As part of a broader budget deal, Boehner is still seeking more spending cuts than Obama has proposed, particularly in mandatory health care spending. Boehner has asked for a long-term increase in eligibility age for Medicare and for lower costs-of-living adjustments for Social Security.

Boehner's tax proposal was first reported Saturday by Politico.

A Boehner aide would not comment on the report.

Obama and Boehner, the chief negotiators, have significant differences to cover to reach an agreement. Obama is seeking $1.4 trillion in revenue in his latest offer, which includes raising the individual tax rates on the top 2%.

If the two sides can't agree, the tax cuts passed in 2001 and 2003 and signed by President George W. Bush will expire on Dec. 31. That will raise taxes for all Americans. Obama wants to let the top two marginal rates increase from 33% to 35% and from 36% to 39.6% for those taxpayers making over that threshold.

Along with the higher taxes, $1.2 trillion in spending cuts over 10 years would kick in on Jan. 2. Half of those cuts would come from the defense budget, which many Republicans and Defense Secretary Leon Panetta have protested.

Boehner has been non-committal about whether or not he would bring a bill to the House floor to extend the current tax rates for 98% of Americans, which the Democratic Senate has already passed. It is one option to address the fiscal cliffif a broader deal cannot be reached. He said only that a full expiration of the tax rates "remains a risk."

He also reiterated that Republicans will not support an effort by the president to remove the need for congressional approval to raise the debt ceiling, the nation's borrowing authority, which is scheduled to hit its $16.4 trillion limit in mid-February.

But the speaker and House Republicans have come under increasing pressure form a number of Senate Republicans who say they should yield to Obama's demand on tax rates and then press him for additional cuts early next year in exchange for an increase in the nation's borrowing limit.

Obama has proposed about $600 billion in spending reductions over 10 years, including about $350 billion in Medicare and other health care savings. But he has also proposed about $200 billion in additional spending, including aid to the unemployed and to struggling homeowners and for public works projects.

Contributing: Susan Davis and the Associated Press