News Column

GOP Makes Budget Counter-offer: Cut Tax Rates to Increase Revenue

Dec 3, 2012

David Lightman and Kevin G. Hall


Republicans in the House of Representatives have offered to support $800 billion in new revenue over 10 years as part of a package aimed at averting the fiscal cliff. On Monday, they proposed raising the new revenue by cutting tax rates, a counter to President Barack Obama's proposal to raise tax rates on the wealthy.

The plan, contained in a three-page letter signed by seven House Republican leaders, is a counteroffer to last week's Obama administration proposal to raise twice as much from revenue. The letter is aimed at getting talks between the two sides, which have been at an impasse for days, moving again.

The Republican offer is a framework for deficit reduction and provided few specifics. It would save an estimated $2.2 trillion over 10 years, including $1.2 trillion from spending and another $200 billion from changes in cost-of-living formulas for a wide variety of federal programs.

No money is included for economic stimulus; the Obama plan sought $50 billion in one year. Nor is any mention made about increasing the nation's debt limit. The White House is seeking to create an easier way to approve increases.

The Republican proposal includes several items that have been discussed for the last year and a half. It quotes extensively from November 2011 testimony from Erskine Bowles, co-chairman of the independent commission that in 2010 recommended ways to trim deficits.

House Speaker John Boehner, R-Ohio, argued Monday that the White House offer "couldn't pass the House and couldn't pass the Senate."

The $800 billion in revenue, which Republicans contend is a significant concession, 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' letter said.

"Instead, new revenue would be generated through pro-growth tax reform that closes special interest loopholes and deductions while lowering rates," they argued.

The plan also envisions $300 billion in savings on discretionary programs, or spending that Congress and the White House can more easily control. Such programs usually include education, housing, transportation and other items.

Another $900 billion would come from so-called mandatory programs and health care, presumably Medicare, Medicaid and other programs where spending is often subject to automatic formulas.

The Republicans have not worked out the process for approving any of this. Some would presumably be passed before Jan. 1, when the Bush-era tax cuts are due to expire and automatic spending cuts totaling $109 billion are to take effect. Other pieces would be passed later, though the two sides would be expected to create a framework for consideration.

"What we're putting forth is a credible plan that deserves consideration from the White House," Boehner said.

Source: (c)2012 McClatchy Washington Bureau Distributed by Mclatchy-Tribune News Service.

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