President Obama gave up Monday on his demand for higher taxes on households earning $250,000 and upped it to $400,000 while embracing smaller cost-of-living Social Security raises in a counter-proposal to House Speaker John Boehner meant to narrow differences and forge a pre-Christmas "fiscal cliff" deal.
Mr. Obama and Boehner met for nearly an hour in the Oval Office on Monday and sources familiar with the talks released specific details of the White House proposal.
Boehner aides said it brought the two sides closer but said a deal was not at hand.
"Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced," said Brendan Buck, a Boehner spokesman.
But the depth, specificity and fine-grain nature of discussions over policy, tax revenue and spending cuts belied the tough rhetoric. Signs point to a deal before the New Year's fiscal cliff deadline -- and possibly an announcement as early as Wednesday.
Boehner's "fiscal cliff" offer brings optimism to Capitol Hill
Boehner's "fiscal cliff" concessions come with a price
Talks picked up genuine momentum on Friday when Boehner agreed to higher income tax rates on households earning $1 million and above. Previously, Boehner opposed all income tax increases. He also gave in on raising the debt ceiling, a vote some Republicans wanted to use as leverage against Obama in 2013. Both gestures, top White House aides said, broke the logjam.
Mr. Obama responded with big concessions of his own on Monday. He offered a $400,000 income threshold for a Clinton-era top tax bracket of 39.6 percent. Boehner had proposed that tax rate for millionaires and a total 10-year tax revenue figure of $1 trillion. Obama wants $1.2 trillion in new revenue. Both sides look for hundreds of billions in new revenue in 2013 through a tax reform process that eliminates some tax deduction and closes loopholes.
The president also wants a two-year cease fire on raising the debt ceiling. Boehner offered one year.
Boehner also asked the White House to increase the eligibility age for Medicare but Mr. Obama again refused. This difference could loom large as Republicans want structural cost-saving changes in Medicare in exchange for raising income tax rates.
Mr. Obama has given ground on cost-of-living adjustments to Social Security and other federal benefits, but is trying to shield Medicare. Democrats have warned Obama they might bolt if he folds on raising Medicare's eligibility age. They have been less emphatic about cost-of-living adjustments.
Other components of the president's counter-proposal include:
- $1.2 trillion in new income tax revenue with a 39.6 percent (up from 35 percent) on income of $400,000 or more.
- $1.2 trillion in spending cuts divided this way: $800 billion in cuts; $290 billion in interest savings due to lower deficits; $130 billion in cost-of-living adjustments - with specific protections to preserve increases for economically disadvantaged beneficiaries.
- The $800 billion in cuts would come from $400 billion in savings to health care entitlements like Medicare and Medicaid; $200 billion in better tax revenue collection, increased financial transaction fees and reduced federal employee benefits.
- $200 billion in domestic discretionary -- annual spending on basic government functions - divided equally between defense and non-defense programs.
- At least $50 billion devoted next year to infrastructure spending and more in latter years.
- Extension of unemployment insurance benefits.
Both sides have already agreed to create long-term solutions for the annual ritual of adjusting the Alternative Minimum Tax, the reimbursement formulas for Medicare physicians and a grab-bag of pro-business tax breaks.
The only outstanding questions revolve around paying for the solutions.
Obama moves on taxes in latest "cliff" counter-proposal
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Obama moves on taxes in latest "cliff" counter-proposal
