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House GOP Answers Obama With Budget Counteroffer

House GOP Answers Obama With Budget Counteroffer

By Caitlin Huey-Burns - December 3, 2012

Speaker John Boehner and other House Republican leaders countered last week’s White House offer to avert the fiscal cliff with a proposal of their own Monday. Included in the response are $800 billion in additional revenue through tax reform, $600 billion in health care cuts, and additional savings from adjusting inflation calculations for Social Security.

In a letter to President Obama, the Republicans said their proposal amounts to a $2.2 trillion deficit reduction package and is based on a plan put forth by Democrat Erskine Bowles to last year’s budget-negotiations super committee.

Bowles, former chief of staff to President Clinton and a co-chair of the White House debt commission, met with GOP leaders last week to discuss ways to reach an agreement to prevent massive tax hikes and spending cuts set to kick in at the end of the year.

Notably, though, the speaker’s plan rejects the president’s call to allow Bush-era cuts to expire for families whose income exceeds $250,000 annually -- a requirement, Obama has said, for any kind of deal between the White House and Congress. “The new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy,” the House Republicans wrote. “Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates.”

Bowles, however, said the GOP proposal does not mirror the one he offered the super committee; rather, his plan reflected a “midpoint” of the proposals from all those involved at the time. “The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today,” he said in a statement circulated by the White House.

Last week, Treasury Secretary Tim Geithner and the White House’s top legislative aide, Rob Nabors, presented a plan to Republicans that included $1.6 trillion in tax increases, $400 billion in entitlement savings, additional stimulus spending and a request to permanently increase the government’s borrowing limit. Republicans scoffed at the offer, dismissing it as unserious. On Monday, Boehner and his fellow conference members told the president they could have responded similarly by sending the White House the House-passed budget plan that proposes a voucher system for Medicare and block grants for Medicaid.

“Mindful of the status quo election and past exchanges on these questions, we recognize 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,” the GOP leaders wrote, underscoring the dueling election mandates perceived by the president and his opposition. Republicans made no mention of the president’s demand to raise the debt ceiling, an issue lawmakers will have to address by early next year. Boehner told reporters last week that he warned Obama that such requests come with a price.

Budget Chairman Paul Ryan, the architect of the House budget proposal, was among those who signed the letter to the president. Others included Majority Leader Eric Cantor, Whip Kevin McCarthy, Conference Chairwoman Cathy McMorris Rodgers, Ways and Means Chairman Dave Camp, and Energy and Commerce Committee Chairman Fred Upton.

The GOP counteroffer also includes $300 billion in cuts to mandatory spending programs and $300 billion in discretionary savings. Additionally, Republicans proposed $200 billion in savings by adjusting the consumer price index for inflation when calculating benefits like Social Security -- a model known as “Chained CPI.” The model is controversial, but provides some type of bipartisan opening for the leaders involved in the debt negotiations.

The president has said that while entitlement spending should be part of the negotiations, Social Security should remain off the table because it does not drive the deficit. However, Obama has publicly expressed openness to the idea in the past. During the first presidential election debate with Mitt Romney, he admitted that Social Security needs tweaking. And, during an Illinois town-hall meeting in August, the president noted he had heard complaints from seniors not receiving a cost-of-living adjustment for Social Security, and said he thought there is a “fairer” way to address the matter: “I do think, in terms of how we calculate inflation, that’s important as well.”

The White House called the Republicans’ counter unbalanced because it did not offer specifics on how to raise revenue -- which loopholes and deductions to close, for example -- or on the kinds of cuts to Medicare. “While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates,” said spokesman Dan Pfeiffer 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 [that] our nation needs.”

With competing offers now on the table, negotiations between those at either end of Pennsylvania Avenue could begin in earnest. Political posturing from each side will surely continue, but the end-of-year deadline is inching closer. As Bowles noted in his statement Monday, “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 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.”

Following Monday’s trading of statements on the latest proposal, members of Congress and the president lapsed into social niceties when Obama hosted lawmakers at the annual White House holiday reception. No word yet on whether the mingling might have helped grease the wheels for an eventual deal. 

Alexis Simendinger contributed to this report. 

Caitlin Huey-Burns is a congressional reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com. Follow her on Twitter @CHueyBurnsRCP.

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