John Boehner, the House Speaker, was urged by senior Republicans to relent over a new top rate of income tax in an attempt to win cuts to America’s expensive entitlement programmes.
Bob Corker, a senator for Tennessee, said Republican leaders should acknowledge their weak hand in the negotiations to avert across-the-board tax hikes and deep cuts to public spending from January 1.
“There is a growing group of folks that are looking at this and realising that we don’t have a lot of cards on the tax issue before year-end,” Mr Corker told Fox News.
Economists have warned that the combination of higher taxes on all American households and $600 billion (£360 billion) of cuts to government spending could throw the country back into recession.
Mr Obama says that he will not sign a new deal without raising the top 35 per cent tax rate – but has signalled that he would be willing to compromise at 37 per cent rather than the 39 of his opening bid.
Read More at telegraph.co.uk . By Jon Swaine.