WASHINGTON — President Barack Obama delivered House Speaker John Boehner a new offer Monday to resolve the pending fiscal crisis — and what may be close to a final deal, which would raise revenue by $1.2 trillion over the next decade but keep in place the Bush-era tax rates for any household with earnings less than $400,000.
The offer is close to the plan that Boehner proposed Friday, according to officials familiar with it. Other officials say the speaker will present the plan to House Republicans today, and both sides are cautiously optimistic that a major deficit reduction plan could be passed well before January, when more than a half-trillion dollars in automatic tax increases and spending cuts would kick in.
Boehner had offered the president a deficit framework that would raise $1 trillion over 10 years, with the details to be settled next year by Congress' tax-writing committees and the Obama administration. In response, Obama reduced his proposal to $1.2 trillion from $1.4 trillion on Monday at a 45-minute meeting with the speaker at the White House. That was down from $1.6 trillion initially.
The White House plan would permanently extend Bush-era tax cuts on incomes less than $400,000, essentially meaning that only the top tax bracket, 35 percent, would rise to 39.6 percent.
The plan also would cut spending by $1.22 trillion over 10 years, an official said, $800 billion of it in programmatic cuts, and $122 billion by adopting a new measure of inflation that slows the growth of government benefits, especially Social Security. The White House is also counting on $290 billion in savings from lower interest costs on a reduced national debt.
Of the $800 billion in straight cuts, Obama said half would come from federal health care programs; $200 billion from other so-called mandatory programs, like farm price supports, not subject to Congress' annual spending bills; $100 billion from defense spending; and $100 billion from domestic programs under Congress' annual discretion.
To make all this happen, Obama proposed fast-track procedures to help congressional tax writers overhaul the individual and corporate tax code and make changes to other programs.
But the president is insisting on some protections for what he has termed the "most vulnerable populations." The new inflation calculations, for instance, would probably not affect wounded veterans and disabled people on Supplemental Security Income. And Obama is sticking by his request for additional upfront spending on infrastructure and an extension of expiring unemployment benefits.
He would also secure some tax and policy changes long sought by both parties but unattainable in the context of smaller budget deals. His proposal would permanently extend popular tax breaks like the credit for corporate research and development, permanently stop the alternative minimum tax so it does not expand to affect more of the middle class, and stop a long-planned and deep cut to Medicare health providers, which Congress has never shown the stomach to allow to kick in.
To keep the country from returning to fiscal showdowns, Obama wants the government's borrowing limit to rise high enough to take the issue off the table for two years, although he said that periodically Congress could weigh in and try to override a presidential lifting of the debt ceiling, should it want to.
In his latest proposal, Boehner offered a one-year debt-limit increase, officials said.