The proposal, loaded with Democratic priorities and short on detailed spending cuts, was likely to meet strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced $400 billion in savings from Medicare and other entitlements, to be worked out next year, with no guarantees.
He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might well be outnumbered by upfront spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.
“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”
Beneath the outward shows of frustration and rancor, Democrats said a deal could still come before hundreds of billions of dollars in automatic tax increases and spending cuts threaten the fragile economy next year. Senator Charles E. Schumer, Democrat of New York, pointed to conservative Republicans who have publicly suggested that the House quickly pass Senate Democratic legislation extending the expiring tax cuts for income below $250,000.
“All you have to do is just listen to what’s happening out there, and you realize there is progress,” he said.
But publicly, the leaders of neither side were giving an inch. And Republican aides said the details of the White House proposal pointed to a re-elected president who believes he can bully Congress.
“They took a step backward, moving away from consensus and significantly closer to the cliff,” said Senator Mitch McConnell of Kentucky, the Republican leader.
The president’s proposal does stick to the broad framework of the deal Mr. Boehner wants: an upfront deficit-reduction “down payment” that would serve to cancel the automatic tax increases and spending cuts while still signaling seriousness on the deficit, followed by a second stage when Congress works next year on overhauling the tax code and entitlements to secure more deficit reduction.
But the details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year. Tax rates would go up for higher-income earners, as in the Senate bill, but Mr. Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve. He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at. The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent.
Administration negotiators also want the initial stage to include an extension to the payroll tax cut or an equivalent policy aimed at working-class families, an extension of a business tax credit for investments and the extension of a number of expiring business tax credits, like the research and development tax credit.
To ensure that there are no more crises like last year’s impasse, Mr. Geithner proposed permanently ending Congressional purview over the federal borrowing limit, Republican aides said. He said that Congress could be allowed to pass a resolution blocking an increase in the debt limit, but that the president would be able to veto that resolution. Only if two-thirds of lawmakers overrode that veto could Congress block a higher borrowing limit.
Article source: http://www.nytimes.com/2012/11/30/us/politics/fiscal-talks-in-congress-seem-to-reach-impasse.html?partner=rss&emc=rss
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