News Column

Republicans Offer New Starting Point on Fiscal Cliff Talks

Dec 3, 2012
Boehner and Obama

House Republicans responded Monday to U.S. President Barack Obama's proposal for avoiding the fiscal cliff with counteroffer that they say would lower deficit spending by $2.2 trillion over the next decade.

The Republicans said their plan would slow the growth of the national debt by raising 800 billion dollars in new tax revenues, slicing $600 billion from federal health programmes and adjusting the calculation of inflation to save $200 billion on Social Security pensions.

It includes $300 billion in savings from other mandatory programmes, such as farm subsidies. Added together with other, smaller cuts, it would produce $2.2 trillion in new savings, the Republicans said.

The proposal is contained in a letter to Obama from House Speaker John Boehner and other senior Republicans, news reports said. It suggests that the framework first laid out during last year's budget battles should serve as a starting point for budget talks aimed at averting the year-end fiscal cliff.

Since Obama's victory in the November 6 presidential elections, Washington has been increasingly consumed by the so-called fiscal cliff, a combination of tax increases and budget cuts taking effect in January.

Economists say the heavy austerity measures would damage US growth. Middle class families, for example, would pay an average of about $2,000 a year more in taxes if Congress fails to act.

"With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and the Senate and be signed into law in the next couple of weeks," the letter says, according to the Washington Post. "The best way to do this is by learning from and building on the bipartisan discussion that have occurred (earlier in) this Congress."

The Republicans, who want to refute the White House's accusation of intransigence, are showing a desire to change social entitlement programmes like Medicare, which is beyond what the White House has been willing to do.

Republicans signaled, for example, they would discuss changing the eligibility age from 65 to 67 for Medicare, the health insurance programme for retirees, and implementing means testing for the programme, Politico reported. The proposal marks the first time Republican leaders other than Boehner have explicitly backed new tax revenue, the Washington Post reported.

Boehner criticized the plan Obama submitted last week as "neither balanced nor realistic," news reports said. Speaking to reporters on Capitol Hill, Boehner said the White House proposal would not have passed the House or the Democrat-led Senate.

"We could have responded in kind," he said. "But we decided not to. What we're putting forward is a credible plan that deserves serious consideration from the White House."

The proposal does not meet the key White House demand to hike tax rates on income above $250,000.

Earlier, White House spokesman Jay Carney reiterated that Obama would reject any proposal that allowed the highest earners Americans to hold onto tax cuts passed more than a decade ago.

"He will not sign a bill that extends those tax rates for the top 2 percent," Carney said during a briefing at the White House. "We can't afford it. It's not wise fiscal policy, and it would defeat the principle of balance that he has embraced so clearly throughout these negotiations."

Obama and House Democrats are pressuring Boehner to hold a vote on Senate legislation that would extend the Bush-era tax cuts on income below $250,000. Obama has demanded the House pass the Senate measure, stressing last week that such a move would keep income taxes level for 98 percent of U.S. households.

Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH

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