House Republicans, rejecting President Barack Obama’s demand
for tax rate increases, offered a $4.6 trillion deficit reduction plan
today that doesn't raise tax rates on the wealthiest Americans.
The proposal is based on a framework from a year ago outlined by Clinton
White House chief of staff Erskine Bowles, one of President Obama's
debt commission chairs, and includes an increase in the eligibility age
for Medicare benefits, likely to age 67.
"What we're putting forth is a credible plan that deserves consideration by the White House," Boehner told reporters.
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The proposal, contained in a letter today to Obama from House Speaker
John Boehner and other Republican leaders, calls for $800 billion in
new revenue over the next decade. It would also cut spending on
entitlements such as Medicare and Medicaid by at least $900 billion and
save another $300 billion through cuts in discretionary spending,
according to the letter to Obama.
The House Republican leaders also proposed saving $200 billion by
revising the way cost-of-living increases are calculated for Social
Security recipients and others, such as retired federal workers.
The White Houre swiftly fired back that the plan "does not meet the test
of balance," and that Republicans were clearly not "serious" about
averting the fiscal cliff.
"Their plan includes nothing new and provides no details on which
deductions they would eliminate, which loopholes they will close or
which Medicare savings they would achieve," he said. "While the
president is willing to compromise to get a significant, balanced deal
and believes that compromise is readily available to Congress, he is not
willing to compromise on the principles of fairness and balance that
include asking the wealthiest to pay higher rates ... 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."
After days of stalemate, the Republicans' offer showed deep differences
with President Barack Obama as the two sides work to head off
across-the-board spending cuts and tax increases due to take effect in
January.
But the proposal could allow negotiators to begin their work in
earnest as both sides now have outlined their visions in concrete terms.
Analysts say the talks will have to show tangible progress this week to
ensure that a deal can be signed into law before the end of the year.
"If you are agreeable to this framework, we are ready and eager to begin
discussions about how to structure these reforms so that the American
people can be confident that these targets will be reached," Boehner, of
Ohio, and several other House Republican leaders wrote in a letter to
Obama.
The Republican proposal would overhaul the complicated U.S. tax code
to raise $800 billion in new revenue over 10 years, roughly half the
total Obama is seeking.
But the Republicans said they would oppose raising tax rates on the
wealthiest 2 percent of U.S. households, a central element of Obama's
proposal.
The plan would also trim government healthcare costs by $600 billion
over a decade, $250 billion more than Obama proposed in his opening bid
last week.
It would slow the growth of cost-of-living increases on federal
benefits by $200 billion by changing the way they are calculated and cut
other government spending by $600 billion.
Using the White House's accounting methods, the Republican proposal
would reduce annual budget deficits by $4.6 trillion over 10 years,
within shouting distance of the $4.36 trillion in savings proposed by
Obama.
But the relative similarity of the headline number masks stark differences in how those savings would be achieved.
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MUTUAL DISTRUST
The cuts proposed by Republicans are sure to face fierce resistance
from Democrats, who are still smarting over $1.1 trillion in cuts that
Republicans extracted in a budget deal last year.
And Obama has insisted that he will not sign any deal that does not
raise taxes on the wealthiest households -- a step Republicans have
resisted so far, even as they expressed a new willingness to reconsider
the anti-tax stance that has defined the party for decades.
Negotiators must overcome more than just mutual distrust as they work
toward a deal in coming weeks. While some business leaders and
grassroots groups are urging Washington to craft a "grand bargain" that
would put federal finances on a sustainable course, lawmakers also face a
more immediate lobbying blitz from groups that worry that any deal
could decimate favored federal programs.
Anti-tax activist Grover Norquist has been in the spotlight as he
pressures Republicans to stick by a pledge many have signed to oppose
any tax increases.
On the other side of the ledger, industry groups are scrambling to
protect spending on everything from education to defense and scientific
research. Liberal groups have mobilized to protect popular federal
health and retirement programs.
"Everyone wants something to happen before the end of the year, but
what's more important than having something happen is having the right
thing happen," said Nancy Altman, co-director of Social Security Works, a
coalition of liberal and labor groups.
"A bad deal is worse than no deal at all," she said.
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