Behind the scenes, administration officials and senior Republican aides continued to make progress. Obama laid out a counteroffer that included significant concessions on taxes, reducing the amount of new revenue he is seeking to $1.2 trillion over the next decade and limiting the hike in tax rates to households earning more than $400,000 a year. Obama had previously sought $1.4 trillion in new revenue, with tax increases on income over $250,000.
Obama also gave ground on a key Republican demand — applying a less-generous measure of inflation across the federal government. That change would save about $225 billion over the next decade, with more than half the savings coming from smaller cost-of-living increases for Social Security beneficiaries.
In addition, Obama increased his overall offer on spending cuts and dropped his demand for extending the payroll tax holiday, which has benefited virtually every worker for the past two years. But he is still seeking $80 billion in new spending on infrastructure and unemployment benefits and an increase in the federal government’s borrowing limit large enough to avert any new fight over the issue for two years.
Boehner has offered a one-year debt-limit increase, and the fresh stimulus spending remains a sticking point, according to senior Republican aides, who also complained that the overall deal remains too tilted toward new taxes.
“Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced,” Boehner spokesman Michael A. Steel said in a written statement.
“We hope to continue discussions with the President so we can reach an agreement that is truly balanced and begins to solve our spending problem,” he said.
Talks over the fiscal cliff have accelerated since Boehner made an offer Friday to raise tax rates on income over $1 million and to delay a fight over the government’s borrowing limit in exchange for significant cuts to health and retirement programs.
On Monday, it became clear that the two sides are extremely close on the broad outlines of the deal that has eluded them for much of the past two years. Boehner’s latest offer calls for $2 trillion in savings over the next decade, half from higher taxes and half from cuts to the fast-growing health and retirement programs that are the federal government’s largest expense. All told, Obama’s latest offer calls for about $2.15 trillion in savings.