Former Sen. Alan Simpson (R-Wyo.) predicted Sunday that tax rates for the wealthy will likely go up next year. 
 
 Speaking on CBS’s “Face the Nation,” Simpson, a co-chairman of the Simpson-Bowles deficit commission, said he and Erskine Bowles, a former Clinton White House chief of staff and the panel’s other co-chairman, believe taxes will go up for the rich. 
 
 “I think Erskine and I both agree that if anybody out there who is, quote, rich doesn’t think their taxes go up, the drinks are on me, I’ll cover it,” Simpson said. 
 
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 Bowles, however, noted that raising taxes on the wealthy wouldn’t be enough to bring down the nation’s deficit. 
 
 “Even if you raise the top rates back to the Clinton rates, that only creates $400 billion over 10 years. That’s $40 billion a year. We got a trillion-dollar-a-year deficit. That alone won’t solve the problem,” Bowles said. 
 
 Bowles said spending cuts must be made in order to bring down the debt. 
 
 “We have to slow the rate of growth of healthcare to the rate of growth of the economy,” Bowles said. 
 
 The deficit hawks are both worried over the impact from going over the “fiscal cliff” — a set of massive tax increases and budget cuts that will go into effect early next year unless Congress acts. Bowles said going over the cliff entails possible layoffs, estimating 2 million people could lose their jobs and the unemployment rate could climb to 9 percent. 
 
 “I think this would be a disaster to go over the cliff,” Bowles said. 
 
 Simpson lambasted lawmakers in both parties who argue going over the fiscal cliff would be politically advantageous for their respective parties. 
 
 “There’s something terribly bizarre and juvenile about that. To think your party comes ahead of your country, I don’t go for that at all,” Simpson said. 
 
 Bowles remains optimistic about a deal getting done, however. 
 
 “I’m a little more encouraged than if you would have asked me about it a week ago,” Bowles said. “They have started to tango now and any time you got two guys in there tangoing, you got a chance to get it done.” ||||| One of the namesakes of America's best-known debt-cutting plan, former White House chief of staff Erskine Bowles, said Sunday he sees signs of progress towards a deal to avert the so-called fiscal cliff the nation faces at the end of the year. 
 
 "I'm a little more encouraged than I would have been if you'd asked me about it a week ago," Bowles said on CBS's "Face The Nation. "I think we've made some progress [last] week." 
 
 "They've started to tango there and any time you've got two guys in there tangoing you've got a chance to get it done," Bowles said, referring to President Barack Obama and House Speaker John Boehner (R-Ohio). 
 
 Bowles, who co-chaired a deficit reduction commission with former Sen. Alan Simpson (R-Wyo.), credited both the president and the speaker with helping to lay groundwork for a possible deal to stop the tax hikes and spending cuts set to kick in at the end of the month. 
 
 Bowles said Obama has insisted on higher tax rates for the wealthy, but has also indicated a willingness to consider entitlement costs. 
 
 Bowles also praised Boehner for not including potential deal breakers in his recent proposal. 
 
 "I think this is a speaker who really gets it," Bowles said. "If you look at the offer he made last week, that offer doesn't mention a thing about block granting Medicaid. It doesn't have a word about premium supports. It doesn't have anything in there about those deep cuts in income support programs. So, I think that advances the ball." 
 
 Read more about: Barack Obama, John Boehner, Taxes, Deficit, Debt, Bowles Simpson Deficit Commission, Erskine Bowles, Fiscal Cliff ||||| European Pressphoto Agency President Barack Obama softened his push for a return to Clinton-era tax rates. 
 
 WASHINGTON—President Barack Obama signaled he wouldn't insist tax rates on upper-income Americans rise to Clinton-era peaks as part of a deficit-reduction deal, showing new flexibility as he tries to accelerate talks with congressional Republicans. 
 
 The new clarity of the White House position marks a potentially important moment in Washington's effort to figure out how to handle tax rates that are due to snap higher next year, one of the thorniest elements of the so-called fiscal cliff. 
 
 Senate Minority Whip Jon Kyl on The News Hub weighs in what it's going to take to reach a deal to avoid the fiscal cliff and why he disagrees with President Obama's strategy to avoid middle class tax hikes. Photo: Getty Images. 
 
 A crack in GOP unity on taxes broke Tuesday when a senior House Republican, Tom Cole of Oklahoma, privately urged his colleagues to accede to the White House's demand they pass an extension of current tax rates just for income up to $250,000. Rep. Cole joins Lunch Break to discuss his position. 
 
 President Obama warns that middle class Americans would see their taxes go up if Congress fails to act to extend the middle class tax cuts. Photo: Associated Press. 
 
 Some Republicans saw it as a hopeful sign that could lead to a compromise. Though GOP leaders remain opposed to raising top rates and want more details on potential entitlement cuts, the White House move opens a range of possibilities for negotiators. 
 
 The debate among Democrats and Republicans over how to avert $500 billion in spending cuts and tax increases has left stock-market investors reacting to each profession of optimism and pessimism from officials. 
 
 Enlarge Image Close ASSOCIATED PRESS Erskine Bowles, former co-chairman of the National Commission on Fiscal Responsibility and Reform, in 2011. 
 
 Enlarge Image Close Associated Press Rep. Tom Cole of Oklahoma. 
 
 Treasury Secretary Timothy Geithner, the White House's lead negotiator in the budget talks, will travel to Capitol Hill Thursday to meet with House Speaker John Boehner (R., Ohio) and other leaders. Policy makers have a month to resolve their differences before the tax increases and spending cuts begin. Mr. Obama said Wednesday he wants a deal by Christmas. 
 
 "I am ready and able and willing and excited to go ahead and get this issue resolved in a bipartisan fashion so that American families, American businesses have some certainty going into next year," he said. "And if we get this wrong, the economy is going to go south." 
 
 Democratic and Republican aides have a good sense of what concessions they are willing to offer, but neither wants to go first for fear of losing leverage. Republicans have said they won't negotiate on taxes until the White House steps forward with concrete ideas for addressing entitlement spending. 
 
 "If they are willing to say 'we're not going to chase party dogma,' House Republicans can do a very good job at finding revenues," said Rep. Pete Roskam (R., Ill.), House Republicans' chief deputy whip. "Members are willing to work to get to yes, but they not willing to get to foolish." 
 
 The White House has said it wants tax rates on household income above $250,000 to rise, with the other rates holding pat. A full return to Clinton-era rates would have households paying a 36% rate on income earned between $250,000 and $388,000, compared with 33% today, and 39.6% rate on income above that level, up from 35%. 
 
 The White House's flexibility, first described by Democrat Erskine Bowles after meetings with Mr. Obama and others, and confirmed by administration officials, could envision tax rates increase from their current levels but less than Clinton-era levels. 
 
 Falling Over the Fiscal Cliff See some scenarios for how different groups of people may be affected by the tax changes that will take place if the fiscal cliff isn't resolved by the Jan. 1., 2013, deadline. View Interactive More photos and interactive graphics 
 
 The trade-off, Mr. Bowles said, would be limits or curbs in tax deductions, which GOP leaders have expressed openness to. 
 
 Asked Wednesday if the top rates need to go to 39.6%, White House press secretary Jay Carney said, "I'm not going to negotiate every detail" of a plan. He said Mr. Obama views returning rates to the Clinton-era levels as "the sensible, clean, simple way" to achieve his target of an additional $1.6 trillion in revenue over 10 years, but that the president is open to other ideas. 
 
 Retreating from the Clinton-era levels opens up a number of new possibilities. Negotiators could pursue having tax rates rise on upper-income Americans to 37% or 38% instead of 39.6%. That could be coupled with new limits on the tax breaks for those households, something GOP leaders say they would oppose. 
 
 Another option would be to leave rates unchanged but lower the income thresholds for when higher rates kick in, which Democrats would dislike. 
 
 A wild card would be wrapping in a longer-term revamp of the entire tax code, which could lower rates for everyone. 
 
 The White House has previously said its $1.6 trillion, 10-year deficit-reduction proposal included roughly $1 trillion from the expiration of some Bush-era tax cuts, including rates for upper-income taxpayers, investment taxes and estate taxes, plus another $600 billion from tactics such as limits on tax deductions. 
 
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 Last August, President Obama and Congress put the U.S. economy on course to go over a "fiscal cliff." WSJ's David Wessel tells you everything you need to know about the "cliff" but were afraid to ask. 
 
 Many House Republicans have said they would not accept any deal that allows tax rates to rise on households earning more than $250,000, and they have suggested they could raise tax revenue instead by eliminating certain tax breaks and deductions. 
 
 There have been signs in recent days that their caucus is beginning to waver. Rep. Tom Cole (R., Okla.) on Tuesday told leaders they should accept the White House's demands on the tax rates so they could shift the focus to spending cuts and regain the leverage. 
 
 Rep. Mike Simpson (R., Idaho) said in an interview Wednesday many Republicans would likely accept a deal that raised tax rates on households earning more than $500,000 or $1 million if Democrats offered to back substantial entitlement cuts. 
 
 Mr. Boehner and other Republican leaders are standing firm on rates, even under the new scenario the White House is willing to accept. At his meeting with Mr. Geithner on Thursday, Mr. Boehner will be joined by his party's top tax writer, House Ways and Means Committee Chairman David Camp (R., Mich.), and House Budget Committee Chairman Paul Ryan (R., Wis.), a party leader whose blessing is considered necessary before many Republicans will agree to any deal. 
 
 The debate over how to handle the Bush-era tax rates has consumed much of Washington's focus in the past two weeks, even though there are a number of other pieces of the so-called "fiscal cliff" that continue to divide policy makers. 
 
 Top corporate executives leaving a meeting at the White House Wednesday said they were optimistic the Obama administration and congressional Republicans would pursue a compromise, even though time to negotiate was running short. 
 
 Enlarge Image Close European Pressphoto Agency Speaker John Boehner stood firm opposing higher rates. 
 
 "There was a real sense of optimism that the leadership and the president appeared to be focused on making a resolution that, if it happens, could help unleash even more growth and job creation than perhaps anyone has previously expected," said Comcast Corp. Chief Executive Brian Roberts in an interview. 
 
 The CEOs used the time to both talk about their companies and to push for certain policies they believe would help their businesses. A number of the executives Wednesday called for Mr. Obama to lower corporate tax rates to help make their businesses more competitive with companies overseas. Some told Mr. Obama they would move fewer jobs offshore with a more competitive corporate tax structure, but they seemed willing to accept the White House's demand that individual income-tax rates for higher earners would rise. 
 
 Separately, a spat between Democrats over what to do with estate tax rates grew more complicated Wednesday when Sen. Mary Landrieu (D., La.) joined Senate Finance Committee Chairman Max Baucus (D., Mont.) in saying she wouldn't support the White House proposal to levy a 45% tax on remaining assets after the first $3.5 million is transferred to heirs. 
 
 Ms. Landrieu wants estate-tax rates to remain at 35%, with the tax taking effect after the first $10 million is transferred, and she described the issue as "make or break for me." Currently, the estate tax applies only to estates worth at least $5.12 million. 
 
 —Janet Hook, Michael R. Crittenden and Siobhan Hughes contributed to this article. 
 
 Write to Damian Paletta at damian.paletta@wsj.com, Corey Boles at corey.boles@dowjones.com and Janet Hook at janet.hook@wsj.com 
 
 A version of this article appeared November 29, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Obama Is Flexible On Highest Tax Rates.
– It's just another Sunday teetering on the fiscal cliff, with the Hill reporting that both Alan Simpson and Erskine Bowles are indicating that tax hikes for the rich were a foregone conclusion. “I think Erskine and I both agree that if anybody out there who is, quote, rich doesn’t think their taxes go up, the drinks are on me, I’ll cover it,” says Simpson. And even "that alone won't solve the problem," adds Bowles, who nevertheless indicated he was "more encouraged" than a week ago, because the GOP and Dems "have started to tango now." He praised John Boehner as "a speaker who really gets it" for not wrapping his proposal in any deal-breakers, notes Politico. Elsewhere on the Sunday dial: Bob Corker on Obama's tax offer: "There is a growing group of folks looking at this and realizing that we don’t have a lot of cards as it relates to the tax issue. I think [that notion] has merit....I actually am beginning to believe that is the best route for us to take." Christine Lagarde on the fiscal cliff: “The best way out of this will be a balanced solution ... (which) takes into account both increasing revenue … and cutting spending, as well." Failure would mean "markets would react very quickly" with stocks "really taking a hit." Cory Booker on his career prospects: "I am absolutely considering running for governor, as well as giving other options some consideration. I'm going to be focused on that for the next week to 10 days or so." As for a run for Frank Lautenberg's Senate seat: "Yeah, I’m actually looking at that a lot as well." Newt Gingrich on Hillary Clinton's 2016 prospects: It's "virtually impossible" for any Democrat to deny her the nomination, and a Clinton candidacy "clears the field."