WASHINGTON – The White House is seeking $1.6 trillion in higher taxes over a decade and an immediate infusion of funds to aid the jobless, help hard-pressed homeowners and perhaps extend the expiring payroll tax cut, officials said Thursday as talks aimed at averting an economy-rattling “‘fiscal cliff” turned testy.
In exchange, the officials said, President Barack Obama will support an unspecified amount of spending cuts this year, to be followed by legislation in 2013 producing savings of as much as $400 billion from Medicare and other benefit programs over a decade.
The offer produced a withering response from House Speaker John Boehner, R-Ohio, after a closed-door meeting in the Capitol with Treasury Secretary Tim Geithner. “Unfortunately, many Democrats continue to rule out sensible spending cuts that must be part of any significant agreement that will reduce our deficit,” he declared.
Boehner added, “No substantive progress has been made between the White House and the House” in the two weeks since Obama welcomed congressional leaders at the White House.
Democrats swiftly countered that any holdup was the fault of Republicans who refuse to accept Obama’s campaign-long call to raise tax rates on upper incomes.
At the White House, presidential press secretary Jay Carney said, “There can be no deal without rates on top earners going up.” Taking a confrontational, at times sarcastic tone, he said, “This should not be news to anyone on Capitol Hill. It is certainly not news to anyone in America who was not in a coma during the campaign season.”
With barely a month remaining until a year-end deadline, the hardening of positions seemed more likely to mark a transition into hard bargaining rather than signal an end to efforts to achieve a compromise on the first postelection challenge of divided government.
Boehner suggested as much when one reporter asked if his comments meant he was breaking off talks with the White House and congressional Democrats.
“No, no, no. Stop,” he quickly answered.
“I’ve got to tell you, I’m disappointed in where we are, and disappointed in what’s happened over the last couple weeks. But going over the fiscal cliff is serious business.”
Republican aides provided the first description of the White House’s offer, although Democratic officials readily confirmed the outlines.
Under the proposal, the White House is seeking passage by year’s end of tax increases totalling $1.6 trillion over a decade, including the rate hikes sought by Obama.
Obama also asked for year-end approval for an unspecified amount of new spending to renew expiring jobless benefits, help homeowners hit by the real estate collapse and prevent a looming Jan. 1 cut in fees for doctors who treat Medicare patients.
The White House also wants a new stimulus package to aid the economy, with a price tag for the first year of $50 billion, as well as an extension of the Social Security payroll tax cut that is due to expire on Dec. 31, or some way to offset it.
In political terms, the White House proposal is a near mirror image of what officials have said Republicans earlier laid down as their first offer — a permanent extension of income tax cuts at all levels, an increase in the age of Medicare eligibility and steps to curtail future growth in Social Security cost-of-living increases.
In exchange, the GOP has offered to support unspecified increases in revenue as part of tax reform legislation to be written in 2013.
The GOP said the White House was offering unspecified spending cuts this year. Those would be followed next year by legislation producing savings from Medicare and other benefit programs of up to $400 billion over a decade, a companion to an overhaul of the tax code.
For the first time since the Nov., 6 elections, partisan bickering seems to trump productive bargaining as the two sides manoeuvred for position.
Senate Majority Leader Harry Reid told reporters, “We’re still waiting for a serious offer from Republicans,” the Nevada Democrat said at a news conference.
Sen. Chuck Schumer, D-N.Y., was more emphatic.
Referring to a meeting at the White House more than a week ago, he said both sides agreed to a two-part framework that would include a significant down payment in 2012, along with a plan to expand on the savings in 2013.
“Each side said they’d submit a down payment. We have. Our preference is revenue. What is theirs?” he said, speaking of the Republicans.
The White House also circulated a memo that said closing loopholes and limiting tax deductions — a preferred Republican alternative to Obama’s call to raise high-end tax rates — would be likely to depress charitable donations and wind up leading to a middle class tax increase in the near future.
At issue is a bipartisan desire to prevent the wholesale expiration of Bush-era tax cuts and the simultaneous implementation of across-the-board spending cuts. The potential spending reductions, to be divided between military and domestic programs, were locked into place more than a year ago in hopes the threat would have forced a compromise on a deficit reduction deal before now.
Economists in and out of government warn that sending the economy over the “cliff” would trigger a recession.
To avoid the danger, Obama and Congress are hoping to devise a plan that can reduce future deficits by as much as $4 trillion in a decade, cancel the tax increases and automatic spending cuts and expand the government’s ability to borrow beyond the current limit of $16.4 trillion.
In the first few days after the elections, Boehner said he was willing to accept a deal that included new revenues, a long-time Democratic demand, and Obama has said he will sign on to savings from Medicare, Medicaid and other benefit programs that Democrats have long defended from proposed Republican cuts.
At the same time, both sides have worked to tilt the bargaining table to their advantage. As part of that effort, Obama travels to Pennsylvania on Friday to campaign for his tax proposal.
Boehner, who will begin a second term as House speaker early next month, has appealed to his rank and file to remain united. At a closed-door meeting this week, he displayed polling data that showed the public would rather see loopholes closed than rates raised as a means of raising revenue for the government.
At the same time, there are tremors within the GOP ranks, with a small number of Republicans saying they are willing to let tax rates rise at upper incomes in view of the election returns, and others predicting legislation to that effect would pass the House if put to a vote.
Associated Press writers Jim Kuhnhenn, Julie Pace, Alan Fram, Stephen Ohlemacher and Andrew Taylor contributed to this story.