White House preparing for ‘fiscal cliff’ talks failure

President Barack Obama's budget office is preparing for the possibility that "fiscal cliff" talks will fail, triggering painful automatic cuts to domestic and defense programs that he and his Republican foes officially want to avoid. White House press secretary Jay Carney described the planning as an abundance of caution, not pessimism about the seemingly stalled negotiations.

The White House's Office of Management and Budget this week "issued a request to federal agencies" for information needed to finalize calculations on the spending cuts required under what is technically known as "sequestration," Carney told reporters at his daily briefing. OMB is "acting responsibly," he added.

"The administration remains focused on reaching agreement, as we've been discussing, on a balanced deficit-reduction plan that avoids sequestration" he said. "This action should not be read … as a change in the administration's commitment to reach an agreement and avoid sequestration."Leaders of both parties have pledged to work together in the coming weeks, and we are confident, as I just said, that we can reach an agreement. However, with less than one month left before a potential sequestration order would have to be issued, the Office of Management and Budget must take certain steps to ensure the administration is ready to issue such an order should Congress fail to act."

Carney's comments came as talks on the fiscal cliff—a series of tax hikes and government spending cuts that could plunge the economy into a new recession—seemed to be making no headway. Obama and congressional Republicans have each put a proposal on the table but do not appear to be actively involved in negotiating a compromise. The president and Republican House Speaker John Boehner spoke by telephone, a House Republican aide said. They spoke "this afternoon—no other information," the aide said.

"If our offer is not acceptable to the president, then he has an obligation to show leadership by presenting a credible plan of his own that can pass both houses of Congress," Boehner said earlier. He accused Obama of snubbing spending cuts he accepted in the past (notably in failed 2011 negotiations) and failing to lay out "serious spending cuts."

"This is preventing us from reaching an agreement," Boehner continued. "With the American economy on the brink of the fiscal cliff, we don't have time for the president to continue shifting the goal posts. We need to solve this problem."

Obama, meanwhile, flatly dismissed the idea that Republicans might use next year's vote on raising the country's debt limit as leverage in current fiscal cliff negotiations, saying it won't be entertained by the White House.

While talks between Obama and Boehner appeared to be in a deep freeze, the president and congressional leaders met separately with top executives of the Business Roundtable association in Washington. A BRT official said the group met with Republican House Majority Whip Kevin McCarthy, then Democratic Senate Finance Committee Chairman Max Baucus and Republican Sen. John Thune, who sits on the Finance and Budget committees.

BRT Chairman Jim McNerney, president and CEO of Boeing, described the discussion with Obama as "candid and constructive" and the chat with congressional leaders as "constructive."

He noted that "we encourage both sides to work around the clock, if necessary, to avoid the severe repercussions that inaction would have on U.S. economic growth and job creation."