Last week, the White House made their initial offer on the so-called “fiscal cliff,” asking congressional Republicans for $1.6 trillion in tax hikes coupled with a $400 billion in spending cuts over 10 years. Republicans leaders, who have been open to the idea of raising tax revenue, dismissed the unrealistic proposal out-of-hand, rightly explaining that the White House gave them something that would never pass Congress.
Yesterday, Republicans made their pitch to resolve the “fiscal cliff,” making a counter-offer that that cuts spending, reforms entitlements, and raises $800 billion in new tax revenue:
House Republican leaders on Monday made a counteroffer to President Obama in the “fiscal cliff” negotiations that would cut $2.2 trillion from the deficit with a combination of spending cuts, entitlement reforms and $800 billion in new tax revenue.
Republican officials said their 10-year plan contained more deficit reduction than the offer the White House presented last week while standing firm against Obama’s demand to increase tax rates on the wealthy.
The White House quickly panned the offer, saying it contained “nothing new” and did not “meet the test of balance.”
The Republican offer came in the form of a three-page letter to the White House signed by House Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.) and four other senior Republicans, including Rep. Paul Ryan (Wis.), the party’s just-defeated vice presidential nominee.
The White House doesn’t like the proposal because it doesn’t raise tax rates on higher-income earners, which is a requirement for Obama of any “fiscal cliff” proposal, despite the fact that those income earners already shoulder a hefty load of he overall tax burden already. According to the Tax Foundation, those being targeted by the White House and Senate Democrats already pay 45% of the total tax burden after credits and deductions.
And while Obama has talked about “balance” in this debate, meaning that whatever deal is reached should be evenly divided between spending cuts and tax hikes, his proposal was incredibly, though unsurprisingly, unbalanced.
Republicans still aren’t offering a lot in detail in their proposal, especially on the $800 billion in new revenue. As has been noted before, Speaker John Boehner offered the same amount of tax revenue during last year’s debt ceiling debate by closing tax loopholes. However, Republicans, who still haven’t made an effective case on why lower taxes are good for the economy, have recently been talking about raising revenue through tax reform; though they’ll be hard-pressed to get such a comprehensive deal through Congress before the end of the year.