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Boehner Sends New Budget Proposal to Obama

Boehner Sends New Budget Proposal to Obama

By Caitlin Huey-Burns and Alexis Simendinger - December 12, 2012

House Speaker John Boehner sent a new fiscal-cliff proposal to the White House on Tuesday in an effort to avert the combination of tax hikes and broad spending cuts set to occur at year’s end.

Boehner would not provide details of the latest offer, but aides say it came in response to a White House proposal on Monday that called for $1.4 trillion in new revenue -- a drop from President Obama's $1.6 trillion opening bid in the negotiations, which Boehner had termed unacceptable. The two men, who met Sunday at the White House, spoke by phone Tuesday evening.

The Republican leader’s counteroffer “would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs,” Boehner spokesman Michael Steel said, noting that the president hasn’t presented a satisfactory proposal for spending cuts. Aides would not elaborate further.

(The Wall Street Journal reported Tuesday night that the White House has indicated it wants an overhaul of the corporate tax code to be part of any fiscal-cliff deal -- a notable expansion of the negotiations' parameters.)

For the first time since the lame-duck Congress convened last month, the speaker addressed the impasse on the House floor earlier Tuesday with a brief speech urging Obama to identify specific cuts he is willing to make. “Where are the president’s spending cuts? The longer the White House slow-walks this process, the closer our economy gets to the fiscal cliff,” the Ohio congressman said after gaveling lawmakers into session. Boehner said that the president’s request to raise tax rates on the wealthy, spend more stimulus money, and raise the debt ceiling without accompanying cuts would not fix the problem.

Obama, in an interview with ABC’s Barbara Walters on Tuesday, said he is confident Republicans will relent on tax rates -- which he wants to see increase for the top 2 percent of earners -- and once they do, “we are prepared to do some tough things on the spending side. Taxes are going to go up one way or another. And I think the key is that taxes go up on high-end individuals."

(Neither the president nor Boehner made mention of the debt ceiling, another element of the looming cliff. Obama wants an increase in the debt limit as part of a larger package; Republicans aren't inclined to give up the leverage that granting an increase provides. This aspect of the negotiations has great ramifications for the financial markets, which were roiled when the last debt ceiling deadline approached in the summer of 2011.)

The swapping of proposals comes as some Republicans have backed off their opposition to Obama’s tax rate stance. The president initially proposed taking the top rates back to Clinton-era levels of 39.6 percent, but there appears to be some flexibility on the exact rate and what the income threshold should be. But Boehner is working to steer the discussion toward spending reductions, and in particular to force the president to take ownership of what would likely be unpopular cuts to entitlement programs.

The White House’s opening bid to Republicans 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. House Republicans countered with a $2.2 trillion deficit reduction package that included $800 billion in new revenue -- derived from closing tax code loopholes and limiting deductions for those in the top 2 percent -- and $600 billion in health care cuts.

Lawmakers say the speaker will need to deliver a majority of his caucus on whatever deal he reaches with the president. “We’re not going to see some deal come out of here where there’s 180 Democrats and 40 Republicans,” Oklahoma Rep. Tom Cole told RealClearPolitics. Cole was among the first Republicans to divert from Boehner’s hard line against tax hikes when he expressed support for the president’s request, arguing it might be best to prevent tax increases for as many Americans as possible. Cole said the party’s leadership hasn’t formally begun to gauge the receptiveness of their conference for a deal. “He knows what he needs to get in order to be able to deliver the votes for the package. So far, clearly, he hasn’t been able to get the spending restraints and entitlement reform that he needs,” he said.

Boehner and the president met one-on-one Sunday at the White House, but their respective staffers have been tight-lipped about the discussion. Their public silence on the matter seemed to be a positive change from the dismissiveness and posturing of recent weeks. On Friday, the speaker held a press conference to complain that “no progress” had been made in the negotiations. Since then, the president has met with House Minority Leader Nancy Pelosi and spoken with Senate Majority Leader Harry Reid. Boehner described his own visit to the other end of Pennsylvania Avenue as “a nice meeting” and “cordial.”

“I’m an optimist. I’m hopeful that we can reach an agreement,” he said. But he is still waiting on the White House to move on spending cuts. Democrats, however, insist that that is the Republicans’ job. House Minority Whip Steny Hoyer told reporters that Republicans don’t want to take the political heat for proposing unpopular cuts and changes to entitlement programs. While the GOP has not formally outlined specifics on reforms, ideas include raising the eligibility age for Medicare, adjusting the cost-of-living calculation for Social Security, and means testing for Medicare recipients. “They don’t want to take responsibility,” Hoyer said. “If that’s their proposal, [they need to] put it on the table.”

Cole said Democrats should embrace the opportunity facing them. “It’s in the president’s interest, actually, given the dimension of the budget problem, to get as many spending cuts and entitlement reform as he can and blame the Republicans,” he said. “If he would work with John Boehner, he could tell his people, ‘Ah, look what those terrible Republicans made me do to get a deal’ and we’d be happy to accept the blame.” 

Caitlin Huey-Burns is a reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com. Alexis Simendinger covers the White House for RealClearPolitics. She can be reached at asimendinger@realclearpolitics.com.

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