WASHINGTON (AP)—Republicans are proposing a fiscal cliff plan that revives ideas from failed budget talks with President Barack 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.
While intended to break a stalemate in place since the administration last week angered Republicans with a $1.6 trillion plan that largely exempted Medicare and Social Security from budget cuts, Monday’s proposal sparked a predictable round of partisanship.
“To protect the middle class while reducing the deficit, simple math dictates that tax rates must rise on the top 2 percent of taxpayers next year,” Senate Majority Leader Harry Reid, D-Nev., said in a statement. “The sooner Republicans grasp that reality, the sooner we can avoid the Fiscal Cliff.”
The Fiscal Cliff is a combination of expiring Bush-era tax cuts and automatic, across-the-board spending cuts due to take effect in January. The cliff is a result of prior failures of Congress and Obama to make a budget deal.
The GOP 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.
Boehner called that a “credible plan” and said he hoped the administration would “respond in a timely and responsible way.” The offer came after the administration urged Republicans to detail proposals to cut popular benefit programs like Medicare, Social Security and Medicaid.
But Obama and his Democratic allies are less willing to look to these benefit programs for cuts after his re-election last month and believe Obama possesses far more leverage now than he did in secret budget talks with Boehner last year.
Monday’s Republican plan contains few specifics and anticipates that myriad details would have to be filled in next year in legislation overhauling the tax code and curbing the growth of benefit programs.
Though the GOP plan proposes to raise $800 billion in higher tax revenue over the same 10 years, it would keep the Bush-era tax cuts—including those for wealthier earners targeted by Obama—in place for now.
GOP aides said their plan was based on one presented by Erskine Bowles, co-chairman of a deficit commission Obama appointed earlier in his term, in testimony to a special deficit “supercommittee” last year.
“The new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy,” Boehner and fellow Republicans said in a letter to Obama. “Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates.”