Obama moves on taxes in latest "cliff" counter-proposal
President Obama gave up Monday on his demand for higher taxes on households earning $250,000 and upped it to $400,000 while embracing smaller cost-of-living Social Security raises in a counter-proposal to House Speaker John Boehner meant to narrow differences and forge a pre-Christmas "fiscal cliff" deal.
Mr. Obama and Boehner met for nearly an hour in the Oval Office on Monday and sources familiar with the talks released specific details of the White House proposal.
Boehner aides said it brought the two sides closer but said a deal was not at hand.
"Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced," said Brendan Buck, a Boehner spokesman.
Other senior Republican aides told reporters on Capitol Hill they are not rejecting the latest White House offer, but they also said that there is not parity or balance in the White House plan and substantive issues remain unresolved. One senior aide said the issues that they are talking about are not technically difficult to resolve, but they were wary the differences might be fundamental issues that are difficult to resolve.
But the depth, specificity and fine-grain nature of discussions over policy, tax revenue and spending cuts belied the tough rhetoric from the two sides in the negotiation. Signs point to a deal before the New Year's fiscal cliff deadline -- and possibly an announcement as early as Wednesday.
Talks picked up genuine momentum on Friday when Boehner agreed to higher income tax rates on households earning $1 million and above. Previously, Boehner opposed all income tax increases. He also gave in on raising the debt ceiling, a vote some Republicans wanted to use as leverage against Obama in 2013. Both gestures, top White House aides said, broke the logjam.
Mr. Obama responded with big concessions of his own on Monday. He offered a $400,000 income threshold for a Clinton-era top tax bracket of 39.6 percent. Boehner had proposed that tax rate for millionaires and a total 10-year tax revenue figure of $1 trillion. Obama wants $1.2 trillion in new revenue. Both sides look for hundreds of billions in new revenue in 2013 through a tax reform process that eliminates some tax deduction and closes loopholes.
The president also wants a two-year ceasefire on raising the debt ceiling. Boehner offered one year.
In addition to disagreement on income levels for tax rates or some other way to get more revenue, the two sides have not set in stone an actual tax reform process. It sounds like they are talking about creating a new sequester-like mechanism in 2014 as incentive for both tax reform and entitlement reforms.
Speaking of entitlements, Boehner also asked the White House to increase the eligibility age for Medicare but Mr. Obama again refused. This difference could loom large as Republicans want structural cost-saving changes in Medicare in exchange for raising income tax rates.
Mr. Obama has given ground on cost-of-living adjustments to Social Security and other federal benefits, but is trying to shield Medicare. Democrats have warned Obama they might bolt if he folds on raising Medicare's eligibility age. They have been less emphatic about cost-of-living adjustments.
Other components of the president's counter-proposal include:
$1.2 trillion in new income tax revenue with a 39.6 percent (up from 35 percent) on income of $400,000 or more.
$1.2 trillion in spending cuts divided this way: $800 billion in cuts; $290 billion in interest savings due to lower deficits; $130 billion in cost-of-living adjustments - - with specific protections to preserve increases for economically disadvantaged beneficiaries. Because changing cost-of-living adjustments would also affect where people fell in various tax brackets, this move would raise $90 billion
The $800 billion in cuts would come from $400 billion in savings to health care entitlements like Medicare and Medicaid; $200 billion in better tax revenue collection, increased financial transaction fees and reduced federal employee benefits.
$200 billion in domestic discretionary -- annual spending on basic government functions - divided equally between defense and non-defense programs.
At least $50 billion devoted next year to infrastructure spending and more in latter years - figures still subject to negotiation.
A one-year extension of unemployment insurance benefits.
Both sides have already agreed to create long-term solutions for the annual ritual of adjusting the Alternative Minimum Tax, the reimbursement formulas for Medicare physicians and a grab-bag of pro-business tax breaks.
Obama also did not ask for an extension of the temporary 2 percent payroll tax cut - a priority for some Democrats.
Funding for Superstorm Sandy will be handled separately from the emerging fiscal cliff package. The Senate is considering the administration's $60.4 billion request and the White House expects swift, bipartisan approval.
CBS News Capitol Hill producer Jill Jackson contributed to this report.
While you are working ok our taxes why don't you get rid of the illegal cigarette taxes. Our Bill of rights ststes that "all taxes shall be fair and equal for all". This means for cigarette smokers also. We don't deserve to be singled out and put into a seperate group that gets illegally taxed on the legal things we do!!!!
This whole debate has come up because of the incredible influence that corporate money has over America. Since the tragic disaster of Reagan, we have been propagandized that somehow government in bad and Wall Street is good.
And we have all lived through the disaster of the Wall Street graft and corruption and disaster after disaster as a result of unregulated private enterprise.
If a lower cost of living calculated through the so-called chained index is to be my fate as retired senior, I only ask that the members of congress accept the very same rule and that it apply to their total compensation.
The latest COLA for Social Security recipients is 1.7% for all of 2013. Data shows the average inflation rate for 2012 will be over 2% (December not being in yet). For 2011, inflation rate was 3.16%. And those figures don't weight medical costs increasing for seniors, who are likely to have more health problems. And the GOP wants to cut COLA even more?
The biggest factor in COLA for seniors is medical costs (the second largest is eating out and transportation, tied). We need to address medical costs separately from Social Security - and address them in any case.
In the Democrat court, lowering FICA taxes at a time when social security and Medicare have financial woes is stump-stupid. I never viewed FICA as a tax in the first place. Without it, I'd probably end up spending a lot more money on disability/health insurance, charitable contributions, and retirement investments.
In the GOP court, they want to cut spending while increasing the most bloated military since Nazi Germany. A true conservative considers spending more than the next 15 top military countries COMBINED to be preposterous. Either the GOP is exceedingly liberal, or have taken Hitler as their role model.
When it comes time for the mass suicides among the elderly as a quick alternative to starvation and freezing to death, I hope they're mature enough to walk into a building of politicians with their assault weapons and leave the elementary schools alone.
While doctors say eat healthier, Congress says eat cheaper. The chained COLA for Social Security means finding a cheaper substitute for senior's fatty hamburger -- dog food maybe. While seniors eat dog food, retired Congressmen dine on filet mignon.
I am sick of hearing about this "fiscal cliff"..Lets just go over. I am sick of Obamanut and his smug thug look. Do not give in to him, lets go over. Either way the bottom feeders will blame the republicans. Obamaman will do his most damage his last two years as a lame duck predisent, so we have not seen nothing yet. Dems don't give a crap about America, most are welfare lifers and they were promised a continuation of benefits if BAMA man was put back in. No need to deny this..it is a fact.
Agreed ...... let the cliff do the nation's dirty work. We're at a time when we need to pay the bills for the sins of Bush, junior grade. Tax increases across the boards does just that, as well as deep spending cuts to both the military and civil programs.
The tax increase will mean very little to me. Just won't go out to eat as often which won't hurt anyone except the restaurant owners, bartenders, waitresses...you know, those rich people that don't need the money.
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And we have all lived through the disaster of the Wall Street graft and corruption and disaster after disaster as a result of unregulated private enterprise.
In the GOP court, they want to cut spending while increasing the most bloated military since Nazi Germany. A true conservative considers spending more than the next 15 top military countries COMBINED to be preposterous. Either the GOP is exceedingly liberal, or have taken Hitler as their role model.
When it comes time for the mass suicides among the elderly as a quick alternative to starvation and freezing to death, I hope they're mature enough to walk into a building of politicians with their assault weapons and leave the elementary schools alone.