Domestic Taxes

Boehner rejects Obama’s opening bid

Speaker John Boehner (R-Ohio) on Thursday rejected a White House offer to avoid the “fiscal cliff” that would include $1.6 trillion in tax increases, $400 billion in spending cuts and a more permanent increase in the debt ceiling, Republican aides said.

Aides said the offer was made by Treasury Secretary Timothy Geithner and Rob Nabors, a top White House adviser, during their meeting with Republican leaders in the Capitol.

{mosads}While the Obama administration described the offer as reducing the deficit by $4 trillion over 10 years, Republicans told The Hill its tax increases amount to $600 billion more than what the Democratic-led Senate passed earlier this year when it approved legislation that would allow tax rates on top earners to rise.

“We’ve offered a balanced approach to deal with the fiscal cliff: raising revenue in a way that protects jobs while cutting spending,” said a Republican congressional aide familiar with the proposal. “But, after two weeks of discussions, the offer the White House made today is completely unbalanced and unreasonable, and amounts to little more than reiterating the president’s budget request — which failed to get a single vote in the House or Senate.”

House Democrats backed the White House for putting forward an offer based on Obama’s 2013 budget.

House Budget Committee ranking member Rep. Chris Van Hollen (D-Md.), emerging from a meeting with Geithner in which leaders were briefed on the offer, said it is House GOP leaders who must now put forth their plan.

“The Republicans have made some nice, positive noises but they haven’t put a plan on the table,” Van Hollen added.

Republicans said the administration is demanding the $1.6 trillion in tax increases upfront, while the smaller amount of spending cuts would come later. The White House also wants $50 billion in new stimulus spending, according to published reports, and to make permanent a change in the way the debt ceiling is raised so that Congress can only block it with a two-thirds majority.

“This offer represents a complete break from reality,” the Republican aide said. “There were only seven weeks between Election Day and Christmas. The White House has now completely wasted three of them. After weeks of negotiations, they just demanded all of their favorite proposals, with no sign of compromise whatsoever.”

At a separate meeting with Senate GOP Leader Mitch McConnell (Ky.), aides said there was laughter in response to Geithner’s offer. 

Boehner did not reference the specific offer during a press conference earlier Thursday, but he voiced disappointment in the state of negotiations and said “no substantive progress” had been made in the last two weeks since he and other congressional leaders met with Obama at the White House.

Democrats argue Obama’s 2013 budget plan — which failed to get a single vote in the House or the Senate this year — outlines the very types of cuts Republicans say are absent in the debate.

The 2013 budget proposed $1.5 trillion in new taxes, $800 billion in “war savings,” $278 billion in mandatory spending cuts and $360 billion in Medicare and other entitlement cuts.

The budget says healthcare money will be saved by charging wealthier people higher Medicare premiums and cutting some payments to providers and drug companies.

“The president has got a budget that he submitted to Congress. It has revenue. It has spending cuts,” Van Hollen said following a meeting with Geithner and Nabors. “At least the president has put his plan forward. You can go on the Internet, you can print a copy. Where is Speaker Boehner’s plan?”

Van Hollen said that the $1 trillion in future cuts called for by the August 2011 debt-ceiling deal should rightfully be counted as part of the offer. He noted that the budget has $340 billion in healthcare savings.

“Everyone should take a look at it,” he said. “Speaker Boehner keeps talking about revenues, Speaker Boehner has never put forward a proposal on revenues.”

Echoing Obama and other Democratic leaders, Van Hollen said that raising tax rates on the wealthy is necessary for a balanced plan.

“If Speaker Boehner has got different math, let’s see it,” he said.

The Democrats haven’t always been so enthusiastic about Obama’s budget proposal. When a GOP bill based on the budget came up for a House vote in March, lawmakers killed it by a unanimous 414-0. The Senate followed suit in May, defeating the plan 99-0. On the tax side, the White House is calling for tax rate increases on the highest earners, and also returning the estate tax to its less generous 2009 levels.

Obama, according to the offer described by Republicans, is willing to accept $400 billion worth of savings from Medicare and other entitlement programs on the spending side.

But the White House offer also includes more than $1 trillion in savings that were already agreed to in the current Congress, and savings from drawing down the wars in Iraq and Afghanistan that have widely been called a gimmick.

According to GOP aides, the offer presented by Geithner also called for rolling back lawmakers’ oversight of the debt ceiling.

The administration’s plan would allow the president to veto any congressional resolution blocking a debt-ceiling increase, an idea floated by Senate Minority Leader Mitch McConnell (R-Ky.) in last year’s debt-ceiling debate. Under that plan, the president’s veto could only be overridden by a two-thirds vote of Congress.

Republicans also complained Thursday that the administration’s offer included a string of costly measures that would cut into the deficit savings.

The administration wants a legislative fix to ensure the Alternative Minimum Tax doesn’t hit more middle-class families, and an extension of a slew of expired or expiring targeted tax provisions that are prized by the business community — both items that have been routinely enacted by Congress without offsets.

At the same time, the proposal from Geithner and Nabors included additional measures to stimulate the economy, including a third year of the current payroll tax cut or a reasonable substitute, and a $50 billion stimulus package for the current fiscal year.

And it would extend current unemployment insurance policies and tack on another so-called Medicare “doc fix,” which would cost a combined $55 billion.

The administration also wants to extend a tax provision that would allow businesses to more quickly write off big purchases, and to help underwater homeowners refinance their mortgage.

—This story was updated at 6:19 p.m.

Tags Boehner John Boehner Mitch McConnell
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