Updated 5:45 p.m. ET
House Speaker John Boehner and House Republicans have offered a counter-proposal to the latest White House offer to avert the "fiscal cliff," by raising $800 billion in tax revenue and cutting entitlement spending.
The proposal, which is based on an idea offered by Joint Committee on Deficit Reduction Co-chair Erskine Bowles during that panel's deficit negotiations, would achieve $2.2 trillion in deficit reduction by cutting $900 billion in spending from programs like Medicare and reforming how cost of living adjustments are calculated for Social Security payments.
In addition, it would raise $800 billion in tax revenue through tax reform. Senior Republican staffers said that those savings could be achieved without raising tax rates, as President Obama demands.
Boehner and GOP leaders sent a letter to the White House Monday laying out the new counter-proposal and said that the "Bowles plan is exactly the kind of imperfect, but fair middle ground that allows us to avert the fiscal cliff without hurting the economy and destroying jobs."
White House Communications Director Dan Pfeiffer rejected the Republicans' offer saying it "does not meet the test of balance."
"In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill," he said in a written statement. "Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve. Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires."
"Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won't be able to achieve a significant, balanced approach to reduce our deficit our nation needs," Pfeiffer added.
Additionally, Bowles responded by saying that the Republicans' plan is not a representation of his plan.
"While I'm flattered the Speaker would call something 'the Bowles plan,' the approach outlined in the letter Speaker Boehner sent to the President does not represent the Simpson-Bowles plan, nor is it the Bowles plan," Bowles wrote in a statement. "In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time.
"The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today. Every offer put forward brings us closer to a deal, but to reach an agreement, it will be necessary for both sides to move beyond their opening positions and reach agreement on a comprehensive plan which avoids the fiscal cliff and puts the debt on a clear downward path relative to the economy."
Meantime, Boehner told reporters that the White House offer from last week is a "la-la land offer that couldn't pass the House, couldn't pass the Senate." He said that while Republicans could have responded by just sending the House Republican budget, they decided to put forth a "credible plan that deserves serious consideration by the White House and I would hope that they would respond in a timely and responsible way."
The Republican counteroffer does not include any mention of the debt limit. Mr. Obama's proposal last week would take the responsibility of raising the debt limit out of Congress in order to avoid brutal fights that led to the United States' credit rating downgrade last summer.
It also is silent on both the payroll tax, which the White House would extend, and on unemployment insurance.
A senior Republican staffer said the framework to achieve the $2.2 trillion in savings on both taxes and spending would have to be worked out in negotiations. "You can't rewrite the tax code in four weeks. Some of the changes to the entitlement programs when you get into the details are going to be very complicated and there is going to be a lot of wrestling over it." He said they would have to figure out "a way to structure this so we both are moving forward..at the same pace."
Republican staffers said enough savings would be achieved to deal with the sequester, but the framework does not lay out exactly how.