WASHINGTON -- One reason Washington optimists say President Obama and congressional leaders will cut a deal to avoid the "fiscal cliff" at the end of the year is confidence that despite the public disagreements, there are private negotiations moving along behind closed doors.

Don't bet on it, Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. "Frankly, I thought we would be accomplishing more in the real talks that are going on privately, but I can tell you - being aware of those - that there's nothing going on privately that's not going on publicly," he said. "We've wasted an enormous amount of time here, sparring back and forth in public. And it strikes me it's a good time to get serious about the proposals."

The two proposals on the table are dueling initial offers by Obama and House Speaker John Boehner, R-Ohio, to reduce the deficit by about $4 trillion over 10 years by heading down two different fiscal paths.

A deal is necessary to avoid the expiration of all the George W. Bush-era tax cuts Dec. 31 and the triggering on Jan. 2 of painful across-the-board spending cuts amounting to $1.2 trillion over 10 years. The combined effect of the two without any action by Washington threatens to throw the economy back into a recession.

The president's plan relies more on tax increases for earners who make more than $250,000 a year and fewer spending cuts, as well as requests for more stimulus money and permanent authority to increase the U.S. debt limit without congressional oversight. Republicans want to cut more spending, particularly on entitlement programs such as Medicare, and leave tax rates alone but raise revenue by overhauling the tax code and enacting changes such as raising the eligibility age for Medicare.

Outside advocates fanned the flame of optimism Tuesday at a conference hosted by Fix the Debt, a bipartisan coalition of business and Washington interests that advocates for deficit reduction. Somewhere in the middle of those two proposals is a middle ground, they said. "I think everybody knows that they just don't want to take the first step and admit it," said former senator Bob Packwood, R-Ore., who helped draft the last major overhaul of the U.S. tax code in 1986.

Packwood said he saw two ways to reach a deal: for President Obama to bring a coalition together at Camp David and tell them, "We're not coming out until we're agreed," or for congressional leaders to quietly and quickly hammer out a deal and pass it before the end of the year.

Congressional leaders have resisted suggestions of a Camp David gathering. Boehner said after the election that any deal "won't happen around a campfire at Camp David."

Deficit hawks such as former senator Judd Gregg, R-N.H., a former Budget Committee chairman, are wary a deal will be reached. "I think there's a clear path to an agreement if the president and the speaker want to reach one," he said. "On the other hand, it appears to me views are hardening."

Gregg, who withdrew himself for consideration as Commerce secretary during Obama's first term, said he believes the White House is to blame for the impasse.

"My sense is they ran over the Republican Party and now they want to back up over them again," he said, "That's basically the view I sense from the White House. It's not that they're here to do policy, they're here to do political annihilation."

Gene Sperling, director of the president's National Economic Council, offered a different view. In a speech this morning, he said, "Recognition that we must raise rates on the highest-income Americans stands today as the critical key to unlocking the door to a bipartisan budget agreement." Republicans continue to oppose individual rate increases.

USA Today