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| FILE - This Nov. 29, 2012 file photo shows House Speaker John Boehner of Ohio speaking to reporters on Capitol Hill in Washington. House Republicans negotiating with President Barack Obama on avoiding the so-called fiscal cliff are proposing to increase the eligibility age for Medicare and to lower cost-of-living hikes in Social Security benefits. Boehner said the GOP proposal is a "credible plan" for Obama and that he hopes the administration would "respond in a timely and responsible way." |
WASHINGTON
(AP) -- 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.
