GOP makes fiscal cliff offer: $800B in tax revenue, changes to Social Security and Medicare
WASHINGTON — House Republicans on Monday proposed a new 10-year, $2.2 trillion blueprint to President Barack Obama that calls for raising the eligibility age for Medicare and lowering cost-of-living hikes for Social Security benefits, a counteroffer to jump-start stalled talks with the "fiscal cliff" just weeks away.
The proposal from House Speaker John Boehner, R-Ohio, and other Republicans comes in response to Obama's plan last week to raise taxes by $1.6 trillion over the coming decade but largely exempt Medicare and Social Security from budget cuts.
The GOP plan also proposes to raise $800 billion in higher tax revenue over the decade but it would keep the Bush-era tax cuts — including those for wealthier earners targeted by Obama — in place for now.
Dismissing the idea of raising any tax rates, the Republicans said the new revenue would come from closing loopholes and deductions while lowering rates.
Boehner called the GOP proposal a "credible plan" and said he hopes the administration will "respond in a timely and responsible way." The offer comes after the administration urged Republicans to detail their proposal to cut popular benefit programs like Medicare, Social Security and Medicaid.
"After the election I offered to speed this up by putting revenue on the table and unfortunately the White House responded with their la-la land offer that couldn't pass the House, couldn't pass the Senate and it was basically the president's budget from last February," Boehner said Monday.
The Boehner proposal itself revives a host of ideas from failed talks with Obama in the summer of 2011. Then, Obama was willing to discuss politically risky ideas such as raising the eligibility age for Medicare, implementing a new inflation adjustment for Social Security cost-of-living adjustments and requiring wealthier Medicare recipients to pay more for their benefits.
Monday's Republican plan contains few specific and anticipates that myriad details will have to be filled in next year in legislation overhauling the tax code and curbing the growth of benefit programs.
Obama did not respond to questions from reporters on his reaction to the Republican counteroffer or whether he had seen the proposal. He was asked about it during an event in the Oval Office with the Bulgarian prime minister.
The clock is ticking closer to the end-of-year deadline to avert the fiscal cliff, which is a combination of expiring Bush-era tax cuts and automatic, across-the-board spending cuts that are the result of prior failures of Congress and Obama to make a budget deal.
Many economists say such a one-two punch could send the fragile economy back into recession.
GOP aides said their plan is based on one presented by Erskine Bowles in testimony to a special deficit "supercommittee" last year — in effect a milder version of the highly controversial 2010 Bowles proposal that caused both GOP and Democratic leaders in Congress to recoil.
Unlike Bowles' official 2010 plan, drafted with former GOP Sen. Alan Simpson, the version released Monday drops the earlier endorsement of Obama's proposal to increase tax rates on family income exceeding $250,000 back to Clinton-era levels, with the top rate jumping from 35 percent to 39.6 percent.
The White House insists Obama won't sign any measure that fails to increase tax rates on upper-income earners.
By GOP math, their plan would produce $2.2 trillion in budget savings over the coming decade: $800 billion in higher taxes, $600 billion in savings from costly health care programs like Medicare, $300 billion from other proposals such as forcing federal workers to contribute more toward their pensions and $300 billion in additional savings from the Pentagon budget and domestic programs funded by Congress each year.
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