This week the president and congressional Republicans seemed to temper their harsh rhetoric just a bit and a glimmer of cautious optimism returned to the fiscal cliff scene.

To be sure the public relations effort did not abate.  The president spoke to audiences around the country to build up popular support for his position on tax increases for the top two percent of earners.  House Speaker Boehner (R-OH) held press conferences and background briefings to firm up support among Republicans and make his case on taxes and the need for spending cuts. 

The impending debt ceiling breach early next year also provided president and the speaker an opportunity to demonstrate their differences. The president insisted that any agreement on the fiscal cliff should include raising the debt limit.  He proposed giving a president the authority to raise the debt limit without congressional approval.  Boehner and Senate Majority Leader Mitch McConnell (R-KY), knowing that congressional approval before the president can raise the debt ceiling provides them significant leverage, immediately rejected the idea.  This may be the final sticking point to a deal.

But, there was some discernable movement in a positive direction this week.  The rhetoric of the debate appeared to soften and the word “stalemate” was little used. Republican leaders seemed to be resigned to the fact that some kind of tax increase for the top two percent income earners would be a part of the final deal.  And, more Democrats seemed to recognize that a deal would have to include changes to entitlement programs. 

Speaker Boehner made a counter offer to the president’s opening position.  The president’s plan would increase tax revenues by $1.6 trillion with minimal spending cuts and provide another $50 billion stimulus spending for infrastructure.  Boehner countered this week by offering $800 billion in new revenue and $1.4 trillion in savings from changes in Medicare and Medicaid, revisions to the way inflation is calculated to set salaries and benefits, and further cuts to discretionary and mandatory spending. 

The White House immediately dismissed the Speaker’s proposal (just as Boehner rejected the president’s plan last week) as nothing new and lacking details.  But, the president and Boehner reportedly did talk by telephone this week and their staffs have been in discussions.

So, the opening positions have been laid on the table and the lines of communications remain open.  One can argue that the stage is almost set for the president and Boehner to begin hard direct negotiations on how to avoid going over the “fiscal cliff.”  The question is whether they can complete them and get the House and Senate to agree within the next two to three weeks. 

Congress did not act merely a spectator to the fiscal cliff drama this week.  The House passed the 2012 Coast Guard Authorization Act, which will now back to the Senate for approval, as well as a number of noncontroversial bills.

The Senate passed the FY2013 Defense Authorization bill, after approving over 100 floor amendments.  The House passed its version in May and House and Senate conferees hope to get a final bill to the president before the end of the year. 

The Senate also passed a bill to end Cold War era trade restrictions with Russia and confirmed General Joseph Dunford to assume command of the International Security Assistance Force (ISAF) in Afghanistan.