GOP issues a new ‘fiscal cliff’ offer to Obama

ANDREW TAYLOR

Asso­ci­ated Press

WASHINGTON — House Repub­li­cans put forth a $2.2 tril­lion “fis­cal cliff” coun­terof­fer to Pres­i­dent Barack Obama on Mon­day, call­ing for rais­ing the eli­gi­bil­ity age for Medicare, low­er­ing cost-of-living hikes for Social Secu­rity ben­e­fits and bring­ing in $800 bil­lion in higher tax rev­enue — but not rais­ing rates for the wealthy.

The White House declared the Repub­li­cans still weren’t ready to “get seri­ous” and again vowed tax rate increases will be in any mea­sure Obama signs to pre­vent the gov­ern­ment from the cliff’s auto­matic tax hikes and sharp spend­ing cuts. Admin­is­tra­tion offi­cials also hard­ened their insis­tence that Obama is will­ing to take the nation over the cliff rather than give in to Repub­li­cans and extend the tax cuts for upper-income earners.

With the clock tick­ing toward the year-end dead­line, House Speaker John Boehner, R-Ohio, and other Repub­li­cans said they were propos­ing a “rea­son­able solu­tion” for nego­ti­a­tions that Boehner says have been going nowhere. Monday’s pro­posal came in response to Obama’s plan last week to raise taxes by $1.6 tril­lion over the com­ing decade but largely exempt Medicare and Social Secu­rity from bud­get cuts.

Though the GOP plan pro­poses to raise $800 bil­lion in higher tax rev­enue over the same 10 years, it would keep the Bush-era tax cuts — includ­ing those for wealth­ier earn­ers tar­geted by Obama — in place for now. Dis­miss­ing the idea of rais­ing any tax rates, the Repub­li­cans said the new rev­enue would come from clos­ing loop­holes and deduc­tions while low­er­ing rates.

Boehner called that a “cred­i­ble plan” and said he hoped the admin­is­tra­tion would “respond in a timely and respon­si­ble way.” The offer came after the admin­is­tra­tion urged Repub­li­cans to detail their pro­posal to cut pop­u­lar ben­e­fit pro­grams like Medicare, Social Secu­rity and Medicaid.

The White House com­plained the lat­est offer was still short on details about what loop­holes would be closed or deduc­tions elim­i­nated, and it insisted that any com­pro­mise include higher tax rates for upper-income earners.

Asked directly whether the coun­try would go over the cliff unless GOP law­mak­ers backed down, admin­is­tra­tion offi­cials said yes. Offi­cials said they remained hope­ful that sce­nario could be avoided, say­ing the pres­i­dent con­tin­ues to believe that going over the cliff would be dam­ag­ing to the econ­omy. And they sig­naled that Obama wouldn’t insist on bring­ing the top tax rate all the way back to the 39.6 per­cent rates of the Clin­ton era. The offi­cials spoke on con­di­tion of anonymity because they were not autho­rized to speak pub­licly about inter­nal White House deliberations.

“Until the Repub­li­cans in Con­gress are will­ing to get seri­ous about ask­ing the wealth­i­est to pay slightly higher tax rates, we won’t be able to achieve a sig­nif­i­cant, bal­anced approach to reduce our deficit our nation needs,” White House Com­mu­ni­ca­tions Direc­tor Dan Pfeif­fer said in a statement.

Boehner saw the sit­u­a­tion as just the reverse.

“After the elec­tion I offered to speed this up by putting rev­enue on the table and unfor­tu­nately the White House responded with their la-la land offer that couldn’t pass the House, couldn’t pass the Sen­ate and it was basi­cally the president’s bud­get from last Feb­ru­ary,” he said Monday.

The GOP pro­posal itself revives a host of ideas from failed talks with Obama in the sum­mer of 2011. Then, Obama was will­ing to dis­cuss polit­i­cally risky ideas such as rais­ing the eli­gi­bil­ity age for Medicare, imple­ment­ing a new infla­tion adjust­ment for Social Secu­rity cost-of-living adjust­ments and requir­ing wealth­ier Medicare recip­i­ents to pay more for their benefits.

Monday’s Repub­li­can plan con­tains few spe­cific and antic­i­pates that myr­iad details will have to be filled in next year in leg­is­la­tion over­haul­ing the tax code and curb­ing the growth of ben­e­fit programs.

Tine is grow­ing shorter before the dead­line to avert the fis­cal cliff, which is a com­bi­na­tion of expir­ing Bush-era tax cuts and auto­matic, across-the-board spend­ing cuts that are the result of prior fail­ures of Con­gress and Obama to make a bud­get deal.

Many econ­o­mists say such a one-two punch could send the frag­ile econ­omy back into recession.

GOP aides said their plan is based on one pre­sented by Ersk­ine Bowles, co-chairman of a deficit com­mis­sion Obama appointed ear­lier in his term, in tes­ti­mony to a spe­cial deficit “super­com­mit­tee” last year — in effect a milder ver­sion of a 2010 Bowles pro­posal that caused both GOP and Demo­c­ra­tic lead­ers in Con­gress to recoil.

Unlike Bowles’ offi­cial 2010 plan, drafted with for­mer GOP Sen. Alan Simp­son, the ver­sion released Mon­day drops the ear­lier endorse­ment of Obama’s pro­posal to increase tax rates on fam­ily income exceed­ing $250,000 back to Clinton-era lev­els, with the top rate jump­ing from 35 per­cent to 39.6 percent.

Bowles, in a state­ment, said he was flat­tered but the GOP plan does not rep­re­sent his proposal.

Still, he added, “Every offer put for­ward brings us closer to a deal, but to reach an agree­ment, it will be nec­es­sary for both sides to move beyond their open­ing positions.”

By GOP math, their plan would pro­duce $2.2 tril­lion in bud­get sav­ings over the com­ing decade: $800 bil­lion in higher taxes, $600 bil­lion in sav­ings from costly health care pro­grams like Medicare, $300 bil­lion from other pro­pos­als such as forc­ing fed­eral work­ers to con­tribute more toward their pen­sions and $300 bil­lion in addi­tional sav­ings from the Pen­ta­gon bud­get and domes­tic pro­grams funded by Con­gress each year.

Boehner sig­naled in dis­cus­sions with Obama in 2011 that he was will­ing to accept up to $800 bil­lion in higher tax rev­enues, but his aides main­tained that much of that money would have come from so-called dynamic scor­ing — a con­ser­v­a­tive approach in which eco­nomic growth would have accounted for much of the rev­enue. Now, Boehner is will­ing to accept the esti­mates of offi­cial score­keep­ers like the Con­gres­sional Bud­get Office, whose mod­els reject dynamic scoring.

Under the administration’s math, GOP aides said, the plan rep­re­sents $4.6 tril­lion in 10-year sav­ings. That esti­mate accounts for ear­lier cuts enacted dur­ing last year’s show­down over lift­ing the government’s bor­row­ing cap and also fac­tors in war sav­ings and lower inter­est pay­ments on the $16.4 tril­lion national debt.

Last week, the White House deliv­ered to Capi­tol Hill its open­ing pro­posal: $1.6 tril­lion in higher taxes over a decade, a pos­si­ble exten­sion of the tem­po­rary Social Secu­rity pay­roll tax cut and height­ened pres­i­den­tial power to raise the national debt limit.

In exchange, the pres­i­dent would back $600 bil­lion in spend­ing cuts, includ­ing $350 bil­lion from Medicare and other health pro­grams. But he also wants $200 bil­lion in new spend­ing for job­less ben­e­fits, pub­lic works projects and aid for strug­gling home­own­ers. His pro­posal for rais­ing the ceil­ing on gov­ern­ment bor­row­ing would make it vir­tu­ally impos­si­ble for Con­gress to block him going forward.

Repub­li­cans said they responded in closed-door meet­ings with laugh­ter and disbelief.

The GOP plan is cer­tain to whip up oppo­si­tion from Democ­rats opposed to any action now on Social Secu­rity, whose defend­ers say should not be part of any fis­cal cliff deal. And Democ­rats also are deeply skep­ti­cal of rais­ing the Medicare age.

Both ideas were part of nego­ti­a­tions between Boehner and Obama in the sum­mer of last year.

In a let­ter to the pres­i­dent, Boehner and six other House Repub­li­cans insisted that the Novem­ber elec­tion that returned Obama to the White House and the GOP to major­ity con­trol in the House requires both par­ties to come together “on a fair mid­dle ground.”

“With the fis­cal cliff near­ing, our pri­or­ity remains find­ing a rea­son­able solu­tion that can pass both the House and Sen­ate, and be signed into law in the next cou­ple of weeks,” Repub­li­cans wrote.

One of the few things the White House and Capi­tol Hill Repub­li­cans can agree to is a frame­work that would make a “down pay­ment” on the deficit and extend all or most of the expir­ing Bush-era tax cuts but leave most of the leg­isla­tive grunt work until next year.

Sign­ing the let­ter was Boehner, House Major­ity Leader Eric Can­tor, Major­ity Whip Kevin McCarthy and Rep. Paul Ryan, the chair­man of the House Bud­get Com­mit­tee and the unsuc­cess­ful GOP vice pres­i­den­tial can­di­date. Rep. Dave Camp, chair­man of the Ways and Means Com­mit­tee, Fred Upton, chair­man of the Energy and Com­merce Com­mit­tee, and Cathy McMor­ris Rodgers, the Repub­li­can Con­fer­ence chair, also signed the letter.

Ear­lier Mon­day, Obama answered ques­tions on Twit­ter for an hour as the White House sought to keep up the pres­sure on the issue.

In response to a ques­tion about his insis­tence on higher tax rates for the wealth­i­est earn­ers, Obama said that “high end tax cuts do (the) least for eco­nomic growth & cost almost $1T.” By con­trast, he said, “extend­ing mid­dle class cuts boosts con­sumer demand & growth.”

Obama said he was open to “smart cuts” in spend­ing, “but not in areas like R&D” and edu­ca­tion, which “help growth & jobs.” He also said he opposes spend­ing cuts that would hurt the dis­abled or other vul­ner­a­ble groups.

Posted by AP News on Dec 3 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.