GOP 'fiscal cliff' plan echoes failed budget talks

By Andrew Taylor

Associated Press

Published: Tuesday, Dec. 4 2012 12:08 p.m. MST

White House Press Secretary Jay Carney gestures as he briefs reporters at the White House in Washington, Tuesday, Dec. 4, 2012.

Charles Dharapak, Associated Press

Enlarge photo»

WASHINGTON — President Barack Obama said Tuesday avoiding an economic plunge over the "fiscal cliff" comes down to Republicans' realizing that tax rates must go up on wealthiest Americans. "We're not going to be able to get a deal without it," he said.

The president said he would consider lowering rates for the top 2 percent of earners next year as part of a broader tax overhaul effort that closes loopholes, limits deductions and finds other sources of revenue.

"It's possible that we may be able to lower rates by broadening the base at that point," Obama said in an interview with Bloomberg Television Tuesday.

The remarks, which reiterated a position that White House officials have expressed privately, is designed to give Republicans an opportunity to lower rates for the rich, but only after they rise at year's end when Bush-era tax cuts expire.

Later, however, White House spokesman Jay Carney left open the possibility that the rate would not have to rise to 39.6 percent, the rate in place during the administration of President Bill Clinton.

Obama's remarks came a day after Republicans proposed a "fiscal cliff" plan that revives ideas from failed budget talks with Obama last year, calling for raising the eligibility age for Medicare, lowering cost-of-living hikes for Social Security benefits and bringing in $800 billion in higher tax revenue.

The counter to a White House plan last week relies more on politically sensitive spending cuts and would raise half the $1.6 trillion in revenue proposed by Obama over the coming decade.

The 10-year, $2.2 trillion proposal from House Speaker John Boehner, R-Ohio, resembles a framework similar to what Boehner supported last year, but Obama is pressing for additional tax increases and appears to be balking at spending cuts discussed in those talks and since.

Administration officials from Obama on down say it'll take money from raising tax rates on the rich — instead of GOP proposals to simply curb their deductions — to win Obama's approval of any plan to avoid the "fiscal cliff."

Boehner's plan, which was signed by other House Republican leaders including recent vice presidential candidate Paul Ryan, drew a sharp dismissal from Republican Sen. Jim DeMint of South Carolina, a leader of tea party conservatives in Congress.

"Speaker Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more, while not reducing our $16 trillion debt by a single penny," DeMint said.

It has been nearly a week since Obama and Boehner talked directly about the looming cliff, though their staffs have been in contact. Boehner attended a congressional holiday party at the White House Monday night, but avoided the photo line where members get their picture taken with the president and have a few minutes to talk.

Obama met with a bipartisan group of governors, who sought assurances that any cuts in spending as part of an agreement on the fiscal cliff wouldn't shift the burden onto states. The governors said they wanted flexibility from the federal government on certain mandated programs like Medicaid to allow them to do more with less.

"We asked for flexibility on how the federal money is passed down to the states and the cuts that are passed down, that we could have some flexibility to do what's in the best interest of our states," said Oklahoma Gov. Mary Fallin, a Republican.

The governors said they were not endorsing any particular proposal but said they wanted to share their ideas on ways that states could play a role in helping reduce the deficit. The governors were meeting later in the day with congressional leaders and said they planned to work with Vice President Joe Biden in the coming weeks.

The Republican proposal Monday sparked a predictable round of partisanship.

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