Sunday, June 24, 2018

Republicans make counteroffer on fiscal cliff

WASHINGTON — GOP congressional leaders countered President Barack Obama's deficit reduction proposal Monday with a plan of their own that is far heavier on spending cuts but that embraces $800 billion in new taxes over the next 10 years.

The counteroffer represented an acknowledgment by Republicans that they had to issue their own proposal to head off $600 billion in automatic tax increases and spending cuts next year. They said that their approach was a move toward the center.

"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," Republican leaders wrote in a letter to Obama.

The president's offer, forwarded to congressional leaders by Treasury Secretary Timothy Geithner last week, stuck almost word for word with the budget proposal the Obama administration released nearly a year ago. Monday's Republican offer on taxes was close to what Speaker John Boehner offered during private talks with Obama last year.

But Monday's offer did bring some Republican concessions. Senior Republican leadership aides said the $800 billion in new revenue would come from increases in tax revenue, not from increased economic growth. But the plan would extend the expiring Bush-era tax cuts on high incomes, something the president has said he would not agree to.

Republican leaders last week rejected the Obama administration's offer and said they would not counter until the president came back with a plan they considered more realistic. But facing increasing political pressure to produce an alternative, Republicans acted Monday.

The White House was critical of the proposal. "The Republican letter released today does not meet the test of balance," said Daniel H. Pfeiffer, the communications director. "In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill."

Republicans did produce proposals that could create a political backlash. Of the plan's savings, $200 billion over 10 years would come from changing the way the government calculates inflation, which would slow benefit increases in programs from Medicare to Social Security and raise taxes by slowing the annual rise in tax brackets.

Republicans said their counteroffer is close to numbers suggested last year by Erskine Bowles, the Democratic co-chairman of the president's deficit reduction task force. On Monday, Bowles sought to distance himself from the Republican plan, saying circumstances had overtaken his numbers.

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