Updated 1:36 p.m. ET - Capitol Hill leaders emerged from their meeting Friday with President Barack Obama sounding optimistic about their ability to reach consensus on vexing tax and spending issues and avoid the impending "fiscal cliff."
Just weeks before an end of year deadline -- when a series of income tax cuts are set to expire just as billions in automatic spending cuts stipulated in the 2011 debt ceiling deal will take effect -- House and Senate leaders suggested they had made progress during their first meeting with President Barack Obama since he won re-election last week.
President Barack Obama meets with congressional leaders for first round of talks aimed at avoiding tax hikes and spending cuts. NBC's Danielle Leigh reports.
"I think we're all aware that we have some urgent business to do," Obama said at the top of the meeting, House Speaker John Boehner, R-Ohio, to his right and Senate Majority Leader Harry Reid, D-Nev., to his left.
That urgency, apparently, was not lost on Republican and Democratic leaders who appeared jointly after the hourlong meeting to express their optimism that a deal was within reach. The word of the day was "constructive," a term which each leader used to describe their talks on Friday.
"I feel very good about what we were able to talk about in there," said Reid. "We have the cornerstones of being able to work something out."
Boehner, the GOP speaker who faces a tough task in convincing conservatives to sign off on any final deal, referenced a framework he's offered tying tax reform to changes in entitlement programs as keeping with Obama's own goals.
House Speaker John Boehner, Rep. Nancy Pelosi, Sen. Harry Reid and Sen. Mitch McConnell speak outside the White House Friday following their fiscal meeting with President Barack Obama.
"I believe that the framework that I've outlined is consistent with the president's call for a fair and balanced approach," he said following the meeting.
Both Obama and Republican leaders in Congress have sketched broad outlines for the type of deal on which they could agree. The president has insisted that wealthier Americans share a higher tax burden as part of any deal's outcome, an idea on which he campaigned against GOP presidential nominee Mitt Romney.
"Our challenge is to make sure that we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus to do the people's business," the president said at the top of the meeting, adding later: "My hope is this is going to be the beginning of a fruitful process where we're able to come to an agreement that will reduce our deficit in a balanced way and deal with some of the long-term impediments to growth."
Boehner's office suggested after the meeting that the leaders' focus would turn to setting long-term targets on levels of taxing, spending and entitlement reform that could be presented to lawmakers after Thanksgiving.
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President Barack Obama shakes hands with Speaker of the House John Boehner during a meeting with bipartisan group of congressional leaders in the Roosevelt Room of the White House on November 16, 2012 in Washington, DC.
Republicans have said they are open to new revenue, as long as it is the byproduct of tax reforms that lower rates and close loopholes and limit deductions. Boehner has also said tax reforms should be linked with steps toward shoring up the solvency of entitlement programs.
"I can say on the part of my members that we fully understand that you can't save the country until you have entitlement programs that fit the demographics of a changing America in the coming years," said Senate Minority Leader Mitch McConnell, R-Ky., following the meeting. "We're prepared to put revenue on the table provided we fix the real problem, even though most of my members -- I think, without exception -- believe we're in the dilemma we're in not because we tax too little, but because we spend too much."
Nonetheless, the leaders' tone following the meeting was a marked departure from much of the toxic rhetoric that had enveloped Washington for much of 2011, when a standoff between Republicans in Congress and Obama brought the government to the brink of shutdown several times and almost produced a default on the national debt.
"The president and the leadership had a constructive meeting and agreed to do everything possible to find a solution that averts the so-called 'fiscal cliff.' and to work together to find a balanced approach to reduce our deficit that includes both revenues and cuts in spending and encourages our long-term economic and job growth," White House press secretary Jay Carney said of the meeting. "Both sides agreed that while there may be differences in our preferred approaches, we will continue a constructive process to find a solution and come to a conclusion as soon as possible."
President Obama says he and congressional leaders are aware of the "urgent business" at hand and are prepared to "work together" and "make tough compromises" to come to an agreement that will reduce deficit, encourage economic growth and protect middle class families. He also whishes House Speaker John Boehner a very happy 'bipartisan' birthday.
That August 2011 debt deal produced the series of automatic spending cuts, known as the "sequester," as part of the deal to extract an agreement to raise the debt limit. The sequester would inflict heavy and immediate cuts, especially to the defense budget, and was designed purposefully as such to offer lawmakers a political incentive to reach some sort of fiscal alternative.
Complicating matters are the 2001 Bush income tax cuts, which were extended for two years by Obama in 2010, which are set to automatically expire (along with a payroll tax break) at the end of this year.
But talks over how to best address the looming sequester stalled for much of 2012, putting lawmakers now against a heard deadline to reach a deal. Economists have worried that the combined effect of tax hikes and spending cuts would have a perilous effect on the economy.
Adding to the encouraging signs, both Reid and House Minority Leader Nancy Pelosi, D-Calif., suggested that they could reach a deal before the end of the year. In Pelosi's case, she urged her colleagues to adopt a deadline before Christmas.
Lawmakers are away from Washington on recess for the Thanksgiving holiday next week, during which, Reid said, talks would continue on how to best address the fiscal cliff. He said the leaders hoped to meet with Obama again shortly after the break.