WASHINGTON (Reuters) - President Barack Obama held his ground on the "fiscal cliff" on Tuesday, insisting on higher tax rates for the wealthiest Americans, while Republicans showed increasing disarray over how far they should go to compromise with Obama's demands.
With less than a month left to confront the budget cuts and tax increases that will begin taking effect in January unless Congress acts, Obama dangled the possibility of lowering tax rates as part of a broad U.S. tax code revamp in 2013.
But he again insisted, in an interview with Bloomberg Television, that tax rates for the wealthiest 2 percent of taxpayers must rise in any deal by the end of the year to avert the assorted measures known as the fiscal cliff.
Obama, a Democrat, may face resistance from his own party if and when he's forced to be specific about how he would cut the cost of entitlements, such as the Medicare health insurance program for seniors.
For the moment, however, the overall political picture Tuesday reflected a relatively solid front of Democrats versus an increasingly shaky group of Republicans.
Mitch McConnell, the Republican minority leader in the Senate, even avoided endorsing the negotiating position of his House of Representatives ally, Speaker John Boehner.
"I think it is important that the House Republican leadership has tried to move the process forward," McConnell told reporters trying to get his views on a proposal Boehner and the House Republican leadership sent to Obama on Monday.
Outside the capital, concern mounted about how and when - not to mention if - the politicians might put their disagreements behind them and deal conclusively with an issue that economists say could trigger another recession.
Corporate chief executives were scheduled to meet with Obama later on Wednesday. The Business Roundtable, a lobbying group for corporations, has arranged the meetings. In addition to prompt action on the fiscal cliff, the group is seeking tax cuts for their companies.
Boeing Co. CEO Jim McNerney, who chairs the group, said its members want "a balanced solution to the nation's fiscal cliff and long-term deficit and debt issues ... including meaningful and comprehensive tax and entitlement reforms."
The manufacturing sector contracted in November and posted its weakest performance in three years, a report showed on Monday. Companies taking part in the survey said uncertainty over the negotiations in Washington was a factor.
U.S. stocks slipped on Tuesday as investors fretted about Washington's ability to avoid a year-end budget crisis.
REPUBLICAN DISARRAY
On Capitol Hill, conservative South Carolina Senator Jim DeMint attacked Boehner, a fellow Republican, over Monday's fiscal cliff offer, which included $800 billion in revenue increases from overhauling the tax code, along with spending cuts and entitlement revisions, as part of a deficit reduction deal.
That amount, which Boehner informally accepted during previous debt-ceiling negotiations in 2011, was not enough to satisfy Obama. But it was too much for DeMint and other Republicans who have made opposition to tax increases of any kind a central part of their politics for many years.
"Speaker Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more," DeMint said in a statement on Tuesday.
Signaling some worry about fragmented sentiment in the House, Republican leaders took the unusual step of removing two hard-line Tea Party conservatives, Tim Huelskamp of Kansas and Justin Amash of Michigan, from the House Budget Committee, where elements of a fiscal cliff deal are likely to be considered.
A few House Republicans, such as Mike Simpson of Idaho and Steve King of Iowa, have said tax increases on the wealthiest may be tolerable under certain conditions.
OBAMA PRESSES ADVANTAGE
The president pressed his agenda on Tuesday, reiterating his openness to unspecified reforms in entitlement programs.
He repeated that as part of any deal, low tax rates on 98 percent of taxpayers should be extended, but that taxes on the top 2 percent should rise. "Let's let those go up," Obama said, referring to a "down payment" for future negotiations.
"And then let's set up a process with a time certain, at the end of 2013 or the fall of 2013, where we work on tax reform, we look at what loopholes and deductions both Democrats and Republicans are willing to close, and it's possible that we may be able to lower rates by broadening the base at that point."
Fueling concerns among some Republicans about resisting compromise are surveys, like one released by the Pew Research Center on Tuesday, which showed that about 53 percent of those polled said they would hold Republicans more responsible than Democrats for going over the cliff; 27 percent said they would hold Obama responsible.
(Additional reporting by Kim Dixon, Rachelle Younglai, Fred Barbash; Writing by Kevin Drawbaugh; Editing by Fred Barbash and Eric Beech)
Obama holds firm on 'fiscal cliff' amid Republican disarray
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