Reports from Washington indicate budget talks may have taken a step backward Thursday as House Speaker John Boehner rejected the Obama administration’s $4 trillion plan to avoid going over the approaching fiscal cliff. Although he offered no details, Boehner said he was “disappointed” with the offer, presented by Treasury Secretary Timothy Geithner in a private meeting at the Capitol. Boehner said the meeting brought “no substantive progress,” and there is a “real danger” of the US tumbling over the fiscal cliff.
The opposing views of the two parties were made apparent in Senate Majority Leader Harry Reid’s take on the same meeting, which he described as “nice.”
“Democrats are on the same page,” Reid said.
Obama’s proposal consists of a two-stage process. The first stage would include $1.6 trillion in new revenue, including $960 billion from raising top marginal tax rates on wealthy Americans, as well as increased capital gains and dividends rates, as well as an additional $600 billion from unspecified sources. The plan also proposes an extension of the Social Security payroll tax break and unemployment insurance benefits, a one-year deferral of the $1.2 trillion in spending cuts to occur over 10 years, a multi-year stimulus package with at least $50 billion applied in the 2013 fiscal year, a plan to refinance underwater mortgages and a permanent increase in the debt ceiling.
The second stage consists of a tax overhaul in 2013 that aligns with Obama’s request for $1.6 trillion in additional revenue, as well as $400 billion to support Medicare and other entitlements listed in Obama’s budget. The entire proposal is consistent with Obama’s budget which was already rejected by Congress.
House Republicans staunchly oppose any solution that includes raising individual tax rates, one of the requests in the Obama proposal. The package also includes spending cuts that the GOP-controlled House considers insignificant, according to aides who spoke to reporters on the condition of anonymity.
“We’ve offered a balanced approach to deal with the fiscal cliff: Raising revenue in a way that protect jobs while cutting spending,” a Republican aid familiar with the proposal told The Hill. “But, after two weeks of discussions, the offer the White House made today is completely unbalanced and unreasonable, and amounts to little more than reiterating the president’s budget request—which failed to get a single vote in the House or Senate.”
Republican leaders want a plan that includes more spending cuts for entitlement programs such as Medicare and Medicaid. Boehner insists any increase in the debt ceiling must be matched with an equal amount of spending cuts.
“I continue to believe that any increase in the debt limit has to be accompanied by spending reductions that meet or exceed it,” he told reporters Thursday. “As I told the president a couple of weeks ago, there’s a lot of things I’ve wanted in my life, but almost all of them had a price tag attached to them.”
White House spokesman Jim Carnay, however, feels Boehner’s persistence is counterproductive.
“Asking that a political price be paid in order for Congress to do its job to ensure the United States of America pays its bills and does not default on its bills is deeply irresponsible,” Carnay said.
Meanwhile, in the Senate, Reid wants Congress to immediately extend the Bush-era tax cuts affecting 98 percent of American households in order to ease middle-class earners’ concerns. Without such an extension, American workers will see a larger portion of their paycheck go toward taxes in 2013.