House GOP leaders endorsed a debt-reduction plan Monday that would raise tax collections by $800 billion over the next decade, but they refused to budge on higher tax rates for the wealthy, the central issue dividing Republicans and Democrats.
In making a counteroffer to President Obama, House Speaker John A. Boehner (R-Ohio) and other senior Republicans suggested that a framework laid out by Democrat Erskine Bowles last year could serve as a starting point for talks aimed at averting the year-end “fiscal cliff.”
That framework aims to raise new revenue through an overhaul of the tax code. It also calls for slicing $600 billion from federal health programs, in part by increasing the Medicare eligibility age from 65 to 67, and saving $200 billion by applying a less generous measure of inflation to all federal programs, including Social Security benefits, according to GOP aides.
For the first time, Boehner managed to get his entire leadership team — including conservative champions such as House Majority Leader Eric Cantor (Va.) and House Budget Committee Chairman Paul Ryan (Wis.), the 2012 vice-presidential candidate — to publicly sign on to a plan that explicitly calls for new tax revenue. Republicans say they are willing to extract all the new tax money from households earning more than $250,000 a year, the same group Obama wants to target with higher tax rates. But the GOP plan would raise the money by wiping out deductions instead of raising rates.
In a meeting with reporters, Boehner called it “a credible plan that deserves serious consideration by the White House.”
But Democrats said the proposed cuts to social safety-net programs would outweigh higher taxes. And they said Republicans have not made clear how they would raise the additional tax revenue without imposing new burdens on the middle class.
“The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill,” White House communications director Dan Pfeiffer said in a statement. “Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit.”
Boehner spokesman Brendan Buck fired back in a statement, “If the President is rejecting this middle ground offer, it is now his obligation to present a plan that can pass both chambers of Congress.”
In adopting the framework laid out by Bowles, a former chief of staff to President Bill Clinton and more recently co-chairman of a bipartisan committee set up to tackle the national debt, the Republicans may have taken a step toward the middle. But Democrats — including Bowles — and independent budget analysts argued that the actual middle ground between the two parties has shifted dramatically since the November election, when Democrats made gains in both chambers of Congress and Obama held on to the White House after promising to raise taxes on the rich.
Bowles said in a statement: “Circumstances have changed. . . . It is up to negotiators to figure out where the middle ground is today. Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions.”
Aides to Obama and Boehner have continued to talk, according to administration officials. And Boehner was due at the White House late Monday to attend a holiday party for members of Congress.
But no high-level meetings were planned. And negotiations appeared to be stalled with just four weeks left until New Year’s Eve, when more than $500 billion in automatic tax hikes and spending cuts are set to take effect, potentially driving the nation into recession.
“I hope they get on a bunch of helicopters and go to Camp David to sort it out,” said Senate Budget Committee Chairman Kent Conrad (D-N.D.). “At the end of the day, I think we’re going to need something like that.”
The framework Boehner unveiled Monday serves as a counteroffer to the plan Obama put on the table last week, which was essentially a reprise of his most recent budget request. While both plans would reduce borrowing by more than $4 trillion over the next decade, Obama’s proposal would raise $1.6 trillion in fresh revenue — double the amount in the GOP plan — and produce only about $350 billion in savings from Medicaid and Medicare, the biggest drivers of future borrowing.
Republicans were outraged by the president’s proposal, calling it a step backward. On Monday, Boehner referred to it as the president’s “la-la-land offer.”
“We could have responded in kind, but we decided not to do that,” Boehner told reporters.
Instead, Boehner began last week rallying top Republicans around the Bowles framework, which was presented in November 2011 to a special deficit- reduction “supercommittee” of Congress. The framework is separate from the recommendations Bowles offered when he served as co-chairman of Obama’s fiscal commission with former Republican senator Alan Simpson of Wyoming.
All told, the plan would reduce borrowing by $2.2 trillion through 2022 — or by as much as $4.6 trillion when previously enacted spending cuts, interest savings and reductions in war spending are taken into account.
The Republican proposal was included in a letter to Obama, which was drafted and signed over the weekend. In addition to Boehner, Cantor and Ryan, the letter was signed by Majority Whip Kevin McCarthy (Calif.), Ways and Means Committee Chairman Dave Camp (Mich.), Energy and Commerce Committee Chairman Fred Upton (Mich.), and newly elected House Republican Conference Chairman Cathy McMorris Rodgers (Wash.).
The offer makes no mention of how to handle a looming battle over the federal debt limit, which will soon need to raised above $16.4 trillion. Nor does the offer provide any suggestions for how to carry out the debt-reduction framework and avoid the fiscal cliff. GOP aides said those details are open to negotiation.
“There are multiple ways to get this done,” said one senior GOP aide who briefed reporters on the condition of anonymity. “The details need to be filled in later.”
Ed O’Keefe contributed to this report.