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Political foes confident of deal

Congressional leaders from both parties voiced fresh optimism after meeting with newly re-elected President Barack Obama about avoiding year-end "fiscal cliff" tax increases and spending cuts that would hammer America's middle class and risk plunging the economy into recession.

Mr Obama's Democrats and opposition Republicans have until the end of the year to work out a deal each side could live with, and that would have a softer impact on the economy that is still recovering very slowly from the last recession.

The leader of the House, Speaker John Boehner, said his Republicans are willing to consider increased revenue "as long as it is accompanied by spending cuts" as leaders in a divided government get to work on a possible deal after a fierce election campaign.

Republicans are opposed to increasing tax rates and want to cut spending, while Democrats do not want to cut into social programmes from health care to education, and are proposing raising taxes on richer Americans.

Mr Boehner presented a framework that one official said called for a deficit down-payment of unspecified size by year's end, to be followed by comprehensive tax reform and an overhaul of health care for the elderly and other benefit programmes in 2013.

Democrats indicated some spending cuts would be fine with them. "I feel confident that a solution may be in sight," said House Democratic leader Nancy Pelosi.

The goal of the high-pressure talks to come is to produce a multi-trillion-dollar deficit-reduction plan that can take the place of the across-the-board tax increases and spending cuts that are slated to take effect on January 1.

In remarks while reporters were present, Mr Obama stressed that time was short as he welcomed the leaders to the White House for the first time since winning re-election this month.

"We have urgent business to do," he said.

There was no indication that the meeting touched on Mr Obama's campaign-long call to raise tax rates at upper incomes.

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