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Paul Ryan

Olivier Douliery, MCT

GOP offers its 'cliff' plan

  • Article by: JONATHAN WEISMAN
  • New York Times
  • December 3, 2012 - 9:43 PM

WASHINGTON - Republican congressional leaders Monday countered President Obama's deficit reduction plan with a $2.2 trillion plan of their own that is far heavier on spending cuts but that embraces $800 billion in higher tax revenue over the next 10 years -- but not raising rates for the wealthy.

The White House declared that 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.

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.

Although 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. The Republicans said the new revenue would come from closing loopholes and deductions while lowering rates.

Boehner said it was a "credible plan" and that he hoped the administration would "respond in a timely and responsible way." The GOP said that its approach was a move toward the center rather than sticking to a position established last year with the passage of the House Republican budget, which included contentious changes to Medicare and Medicaid and deep domestic spending reductions.

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.

The president's offer, forwarded to congressional leaders by Treasury Secretary Timothy Geithner last week, stuck almost word for word with the budget proposal the administration released nearly a year ago. Monday's Republican offer on taxes was close to what Boehner offered during private talks with Obama last year.

The offer itself -- in a letter signed by the Republican House leadership, including Rep. Paul Ryan, the former vice presidential nominee -- means that both sides have now put their opening bids on the table. Republican leaders last week loudly rejected the Obama administration's offer and said they would not counter until the president came back with a plan they considered more realistic, not the one that Boehner again dismissed Monday as a "La-La-Land offer."

But facing increasing political pressure to produce an alternative, Republicans acted Monday. "What we are putting forth is a credible plan that deserves serious consideration from the White House," Boehner said.

But the White House disagreed.

"The Republican letter released today does not meet the test of balance," said communications director Daniel Pfeiffer. "In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill."

Possible backlash

Republicans did produce proposals that could create a political backlash. Of the plan's savings, $200 billion over 10 years would come from changing the way the government calculates inflation, which would slow benefit increases in programs from Medicare to Social Security and raise taxes by slowing the annual rise in tax brackets. Republican aides said that it will be unpopular, but that it is the right response to deficits still topping $1 trillion.

The Republican plan also called for $600 billion in cuts to federal health care programs, including an increase in the eligibility age for Medicare and increased means testing to shrink health benefits for more affluent seniors.

In all, the Republican offer would reduce the deficit more than the president's, which predicted about $1.8 trillion in deficit reduction over the next 10 years.

In an effort to give their proposal added credibility, Republicans said their counteroffer is close to numbers suggested last year by Erskine Bowles, the Democratic co-chairman of the president's deficit reduction task force. On Monday, Bowles sought to distance himself from the plan, saying circumstances had overtaken his numbers. He said that to get a deal "it will be necessary for both sides to move beyond their opening positions."

The Associated Press contributed to this report.

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