President Obama offered Republicans a detailed plan Thursday for averting the year-end “fiscal cliff" that calls for $1.6 trillion in new taxes, $50 billion in fresh spending on the economy and an effective end to congressional control over the size of the national debt.
The proposal, delivered to the Capitol by Treasury Secretary Timothy Geithner, mirrors previous White House deficit-reduction plans and satisfies Democrats’ demands that negotiations begin on terms dictated by the newly re-elected president.
The offer lacks any concessions to Republicans, most notably on the core issue of where to set tax rates for the wealthiest Americans. After two weeks of talks between the White House and aides to House Speaker John Boehner, R-Ohio, it seemed to take Republicans by surprise.
Boehner quickly rejected the proposal and was trying late Thursday to decide how to respond, aides said. After meeting with Geithner for about 45 minutes Thursday morning, the speaker announced his frustration with a negotiation process in which nearly three weeks have lapsed since the election with “no substantive progress."
“I’m disappointed in where we are, and disappointed in what’s happened over the last couple weeks," Boehner told reporters. “Going over the fiscal cliff is serious business. And I’m here seriously trying to resolve it. And I would hope the White House would get serious as well."
Senate Minority Leader Mitch McConnell, R-Ky., called the proposal a “step backward" from compromise — with time running out for policymakers to agree on a plan to prevent more than $500 billion in tax increases and spending cuts that could rattle the economy.
“This is a real problem. Every day, the delay brings us one step closer to the fiscal cliff that we simply must avoid," McConnell said.
Democratic leaders, meanwhile, were triumphant after receiving similar briefings from Geithner and White House legislative liaison Rob Nabors.
Top Democrats have for months insisted that an Obama victory would entitle them to demand far more in new taxes than Republicans have been willing to consider, to seek new measures to boost economic growth, and to avoid major cuts to entitlement programs, such as Social Security and Medicare.
“Democrats are on the same page," said Senate Majority Leader Harry Reid, D-Nev. “The president has made his proposal; we need a proposal from them."
Although the White House offer seemed to startle Republicans, it contains little that would be unfamiliar to anyone following the president’s recent public statements. The exception was his proposal on the federal debt limit. GOP aides said Obama is seeking to permanently enact procedures that were temporarily adopted in the summer of 2011 that allow the White House to unilaterally increase the debt ceiling unless two-thirds of lawmakers disapprove.
That process, initially proposed by McConnell, was not intended to become permanent. By trying to make it so, Obama is seeking to avoid another damaging battle over the debt ceiling that would again risk a national default. However, this change would also deprive Congress of its historic authority over federal borrowing.
Unless Congress acts on the fiscal cliff, taxes will rise significantly in January for nearly 90 percent of Americans, and about $65 billion will be sliced out of the Pentagon and other agency budgets, probably triggering a recession. Simply canceling the changes, however, risks undermining confidence in the nation’s ability to manage its rising debt.
