House Speaker John Boehner has offered to take the US federal debt limit off the table for a year in a bid to revive talks to solve a fiscal crisis that could cause a recession, The Washington Post said.
Citing Democrats and Republicans familiar with the talks, The Post said the offer came on Friday.
If confirmed, it would mark a major concession in negotiations to strike an 11th-hour deal to avert painful tax increases and budget cuts. Boehner's office however would not confirm the deal.
"Our position has not changed," his spokesman Michael Steel told AFP. "Any debt limit increase would require cuts and reforms of a greater amount."
The Republican leader's offer also includes a proposal to raise tax rates for millionaires that would bring $460 billion in revenue over the next decade -- about half of President Barack Obama's request -- the daily said.
It cited a Democrat familiar with the talks as saying the White House has rejected Boehner's proposal because it would not raise enough funds to sufficiently decrease record budget deficits, and because it would not extend emergency unemployment benefits into the new year.
Boehner's plan would produce about $2 trillion in savings over the next decade, split evenly between new taxes and spending cuts, a Republican familiar with the discussions told The Post.About $460 billion would be secured in tax revenue by letting George W. Bush-era tax cuts expire on income exceeding $1 million a year. But the cuts would be extended for all other tax brackets under the plan.
"Recognizing the importance of raising tax rates is a big, positive and important step," former White House economic adviser Lawrence Summers told The Post, though he stressed he was not speaking for the Obama administration.
"The evaluation of any deal should depend on how much total revenue is raised, whether adequate demand is maintained to sustain the recovery and whether we are restoring confidence, or just marking time until another debt-limit crisis."
President Barack Obama warned earlier this month that he would reject any deal to end the so-called fiscal cliff showdown that let Republicans wield new leverage next year over lifting the cap on government borrowing.
The Treasury Department says the United States will hit its statutory borrowing limit near the end of the year, but that it can take emergency measures to push off the moment of crisis for a few months.
The country's current debt is around $16.2 trillion, and continued borrowing to finance the budget shortfall would send the government past the fixed $16.39 trillion level.
Obama insists that he will not allow a repeat of the crisis last year, when the United States came perilously close to defaulting on its debts, as Republicans sought deep spending cuts in return for more government borrowing.
Every time the US government comes up against its spending limit, Congress must vote to raise it so Washington can service its debt, amid fears that a US default could adversely affect both the domestic and the global economy.