House Republicans respond to President Obama with fiscal cliff counteroffer
WASHINGTON – House Republicans on Monday laid out their proposal to avert a potential austerity crisis, countering what they ridiculed as a “La-La Land offer’’ from President Obama with one calling for almost twice as much in spending cuts and half as much revenue increases.
The Republican plan, outlined in a three-page letter sent to the White House, sets out to raise $800 billion in new revenue over the next decade through closing unspecified tax loopholes and cut $1.2 trillion through a battery of changes, which could include raising the eligibility age for Medicare. In addition, House Republicans proposed saving $200 billion through slowing the government’s increases in payments for programs such as Social Security.
The plan – which was quickly and emphatically dismissed by the White House -- ignores the centerpiece of Obama’s blueprint: allowing tax cuts to expire for the nation’s wealthiest taxpayers. But it does provide the framework for discussion in the coming days, now that both sides have publicly outlined their starting positions.
“Unfortunately,” House Speaker John Boehner told reporters, “the White House responded with their La-La Land offer that couldn’t pass the House, that couldn’t pass the Senate.”
“We could have responded in kind,” he added. “But we decided not to. What we’re putting forward is a credible plan that deserves serious consideration from the White House.”
Congress has just 28 days left to head off an economically noxious combination of tax increases and budget cuts hits, and doing so requires an end to months of partisan wrangling. Fed chairman Ben Bernanke has dubbed the impending austerity crisis a “fiscal cliff.’’
The parties’ proposals illustrate starkly diverging philosophies. Democrats want to raise taxes on the wealthy and limit the budget cuts, particularly on safety net programs; Republicans are trying to preserve current tax cuts, including for the wealthy, while imposing deeper spending cuts.
Obama has been adamant that rates must rise on income greater than $250,000 on Jan. 1, a shift that would put an additional $1 trillion into government coffers in the next decade. Obama also wants to eliminate unspecified deductions, for another $600 billion.
But Republicans say that, rather than boost taxes on the wealthy, $800 billion can be raised by changing deductions and tax credits. Boehner has not detailed which tax breaks he would target.
Fellow Republicans say they envision a far larger tax code rewrite that would result in lower tax rates overall. Those plans, however, are not outlined in the letter and may not become part of the overall negotiations.
Obama did not respond to questions about the Republican counteroffer when he was asked during an event in the Oval Office with the Bulgarian prime minister. But White House communications director Dan Pfeiffer said the plan “does not meet the test of balance.”
“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,” Pfeiffer said in a statement. “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.”
Another potential sticking point is the potential change to Social Security and Medicare. The Republican plan includes $600 billion through “health savings,” something that Republican aides said would be achieved through a variety of measures including raising the eligibility age for Medicare from 65 to 67.
Obama had discussed raising the age during failed debt discussions with Boehner last summer, but Democrats – including many in the Massachusetts delegation – are generally opposed to such proposals.
“Rather than cutting Medicare and Social Security benefits as Republicans propose, we can save billions of dollars by ending unjustifiable giveaways to big oil and billionaires and reducing bloated nuclear weapons programs,” Representative Edward J. Markey, a Malden Democrat, said Monday in a statement.
The House Republican offer was signed by several top Republicans, including Boehner, House Majority Leader Eric Cantor, and Representative Paul Ryan, the former vice presidential nominee.
The letter is vague on some of the specifics on entitlement reforms. It says: “It would be counterproductive to publicly or privately propose entitlement reforms that you and the leaders of your party appear unwilling to support in the near-term.”
Republicans said their plan is based on a framework outlined in congressional testimony by Erskine Bowles, a former top official in President Clinton’s administration who last year co-chaired an influential debt-reduction commission with former Senator Alan Simpson.
But Bowles distanced himself from the House Republicans proposal and said the ideas outlined in their letter do not “represent the Simpson-Bowles plan, nor is it the Bowles plan.”
“To reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy,” Bowles said in a statement.
Senate Minority Leader Mitch McConnell almost immediately praised his counterparts in the House, saying it was ground to build upon in negotiations.
“If the president is serious about joining us in an effort to reduce the deficit and protect the economy, he’ll get off the campaign trail, drop the left-wing talking points, and instruct his staff to negotiate a solution in good faith based on actual written proposals,” McConnell said in a statement. “In short, he’ll begin doing what leaders do: Lead.”
Boehner said he hadn’t spoken with Obama since last week. “The letter’s appropriate,” he said. Asked if he would speak to him at last night’s holiday party being held at the White House, Boehner said, “I might run into him. You never know.”Matt Viser can be reached at firstname.lastname@example.org