With the national debt already bumping up against a $16.4 trillion cap set last year, Congress risks a government default unless it acts to raise the debt ceiling in the next few months. Some Republicans had argued that party leaders should use the threat of default to demand additional spending cuts from Obama.
Boehner’s offer signals that he expects a big deal with sufficient savings to meet his demand that any debt limit increase be paired dollar for dollar with spending cuts. That would permit him to keep a key vow to his party — and head off a potentially nasty debt-limit fight — at least until the end of next year.
“Our position has not changed,” Boehner spokesman Michael Steel said Sunday. “Any debt limit increase would require cuts and reforms of a greater amount.”
The White House rejected Boehner’s offer, saying it would raise too little cash to significantly dent record budget deficits and do nothing to extend emergency unemployment benefits into the new year, according to a Democrat familiar with the talks. But the offer was viewed as a breakthrough, the Democrat said.
The offer also includes a proposal to raise tax rates for millionaires, generating as much as $460 billion over the next decade — about half what Obama has demanded from the wealthy, according to official estimates.
Senior White House officials remained in contact with Boehner’s staff throughout the weekend in a sign that serious negotiations had finally begun after weeks of stalemate and partisan posturing.
“Recognizing the importance of raising tax rates is a big, positive and important step,” said former White House economic adviser Lawrence H. Summers, who emphasized that he was not speaking for the Obama administration.
“The evaluation of any deal should depend on how much total revenue is raised, whether adequate demand is maintained to sustain the recovery and whether we are restoring confidence or just marking time until another debt-limit crisis,” Summers said.
Boehner and Obama have not spoken directly since the phone call Friday afternoon in which Boehner extended his latest offer. With Obama in Newtown, Conn., to attend a Sunday-night service for victims of Friday’s school massacre, aides were uncertain when their next meeting would take place.
All told, Boehner’s proposal would generate about $2 trillion in savings over the next decade, split equally between new taxes and spending cuts, according to a Republican familiar with the talks. On the tax side, as much as $460 billion would be locked in by letting the George W. Bush-era tax cuts expire on income over $1 million a year.