Outline of US fiscal deal emerges The shape of a deal to avert the US fiscal cliff is at last emerging, with at least $1tn in new taxes, up to $1tn in fresh spending cuts and an increase in America's debt ceiling, as negotiators scramble to reach an agreement before the end-of-the-year deadline. Barack Obama, US president, and John Boehner, Republican speaker of the House of Representatives, held their third face-to-face meeting in eight days at the White House amid signs of growing momentum in the talks. If they strike a deal in the coming days, and are able to pass it through Congress, it would remove a huge cloud of uncertainty hanging over the global economy. Failure to avert the fiscal cliff - a combination of $600bn in annual automatic tax rises and spending reductions by the government starting next year - would probably tip the US into a new recession next year, a prospect that has alarmed investors round the world, as well as the American public. Signs that the two sides may be getting closer together helped give a positive mood to the US equity market, where the S&P 500 was up 1 per cent by lunchtime. William Stone, chief investment strategist at PNC, told clients that politicians appeared committed to hammering out a deal. We believe there could be more progress this week than in previous weeks since Congress is scheduled to leave for the holidays at the end of this week. Importantly, if no progress is made we expect policy makers to remain in Washington through the holidays. The market has largely traded up and down in line with optimism or otherwise over a deal, though some traders are beginning to argue that a range of outcomes are baked into equity prices. Reaching an agreement will only be the first step, however. In particular, Mr Boehner may face challenges in passing the legislation through the House, if he is perceived by conservative members to have made too many concessions on taxes. Mr Boehner is expected to discuss the talks with members of his party at a meeting on Tuesday. Some Democrats may also balk at the terms of any deal if they believe Mr Obama compromised too aggressively on spending cuts. An important breakthrough came over the weekend, when Mr Boehner offered to allow tax rates to rise for millionaires from 35 per cent to 39.6 per cent, abandoning his party's long-held opposition to the tax rate increases that Mr Obama has been demanding. Overall, Mr Boehner is offering a package worth nearly $1tn in new revenue, including about $500bn to be achieved through a tax reform process that would limit tax breaks and deductions next year. While this is still short of the $1.4tn in revenue the president is demanding, it significantly narrows the differences between the two sides, leaving room for negotiations on the final details. Among the options would be to raise tax rates for households earning more than $500,000 or $750,000 per year, which would bring in more revenue than Mr Boehner is allowing. In addition, Mr Obama and Mr Boehner still have to settle on the nature of spending cuts, including to popular government health and pension programmes, which Republicans view as essential to any package but many Democrats resist. In addition, Mr Obama and Mr Boehner will also have to thrash out thorny issues such as the size of any increase in the debt limit, which will have to be lifted by February to avoid default. Mr Obama is also pushing for the inclusion of short-term stimulus measures in any package, such as the renewal of emergency jobless benefits, as well as new middle class tax cuts to replace the expiration of a temporary payroll tax holiday.