The White House is promoting a $1.8 trillion package of spending cuts and tax hikes as the best approach to replace deep reductions in domestic and defense spending set to begin next week – even as Republicans dismiss the proposal as not serious.
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With barely more than a week until the deep cuts, known as the sequester, take effect, President Obama and his advisers this week maintained that a deficit reduction plan he put on the table in December amid negotiations over the “fiscal cliff” should still be considered by Congress as a way to avoid another fiscal crisis. Obama spoke with House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday, but no progress was reported.
Obama originally made the offer to Boehner in December negotiations, which ultimately fell apart. His plan, which the administration detailed publicly Thursday, would consist of $200 billion in cuts to domestic and defense programs; $400 billion in reductions in health spending, including Medicare; $200 billion in cuts to other mandatory spending, such as farm subsidies; and $130 billion in savings achieved through a new cost-of-living formula that would slow spending on federal programs, including Social Security. The president’s plan would also raise $680 billion in fresh tax revenue, by limiting tax breaks for the wealthy, closing corporate loopholes and changing the cost-of-living formula that also determines tax brackets.
Combined with lower interest costs as a result of the reduced federal borrowing, the White House said this week that Obama’s proposal would achieve $1.8 trillion in deficit reduction over 10 years. That would come on top of $2.5 trillion in deficit reduction already achieved in deals between Congress and the president.
“His proposal resolves the sequester and reduces our deficit by over $4 trillion dollars in a balanced way — by cutting spending, finding savings in entitlement programs and asking the wealthiest to pay their fair share,” White House Communications Director Jennifer Palmieri wrote in a blog post Thursday. “As a result the deficit would be cut below its historic average and the debt would fall as a share of the economy over the next decade.”
But Republicans dismissed the proposal out of hand, saying that Obama is looking to essentially double up on the new taxes he won in the “fiscal cliff” deal. That last-minute deal, which came after negotiations between Obama and Boehner collapsed, allowed tax rates to rise for people earning over $400,000 a year, raising more than $600 billion in revenue.
“The president’s final offer was dramatically out of ‘balance,’ with greater than $400 billion more in tax hikes than in spending cuts,” Boehner spokesman Brendan Buck said. “The president was offered a truly balanced approach … and he turned it down. His appetite for higher taxes knows no bounds.”
Boehner’s original proposal to the White House was to raise new tax revenue through an overhaul of the tax code — without raising rates. But Republicans say that while they still would still like to overhaul the tax code, any reform should not increase taxes.
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Howard Schneider Battling to revive a once-dominant economic power, Japan may turn towards U.S.-led trade pact.
Craig Timberg and Ellen Nakashima Targeting law firms, Capitol offices, nonprofits and embassies, they get a map of how the capital works.
Ylan Q. Mui Central bank officials want to give bond-buying more time to benefit consumers, minutes signal.
With barely more than a week until the deep cuts, known as the sequester, take effect, President Obama and his advisers this week maintained that a deficit reduction plan he put on the table in December amid negotiations over the “fiscal cliff” should still be considered by Congress as a way to avoid another fiscal crisis. Obama spoke with House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.) on Thursday, but no progress was reported.
Obama originally made the offer to Boehner in December negotiations, which ultimately fell apart. His plan, which the administration detailed publicly Thursday, would consist of $200 billion in cuts to domestic and defense programs; $400 billion in reductions in health spending, including Medicare; $200 billion in cuts to other mandatory spending, such as farm subsidies; and $130 billion in savings achieved through a new cost-of-living formula that would slow spending on federal programs, including Social Security. The president’s plan would also raise $680 billion in fresh tax revenue, by limiting tax breaks for the wealthy, closing corporate loopholes and changing the cost-of-living formula that also determines tax brackets.
Combined with lower interest costs as a result of the reduced federal borrowing, the White House said this week that Obama’s proposal would achieve $1.8 trillion in deficit reduction over 10 years. That would come on top of $2.5 trillion in deficit reduction already achieved in deals between Congress and the president.
“His proposal resolves the sequester and reduces our deficit by over $4 trillion dollars in a balanced way — by cutting spending, finding savings in entitlement programs and asking the wealthiest to pay their fair share,” White House Communications Director Jennifer Palmieri wrote in a blog post Thursday. “As a result the deficit would be cut below its historic average and the debt would fall as a share of the economy over the next decade.”
But Republicans dismissed the proposal out of hand, saying that Obama is looking to essentially double up on the new taxes he won in the “fiscal cliff” deal. That last-minute deal, which came after negotiations between Obama and Boehner collapsed, allowed tax rates to rise for people earning over $400,000 a year, raising more than $600 billion in revenue.
“The president’s final offer was dramatically out of ‘balance,’ with greater than $400 billion more in tax hikes than in spending cuts,” Boehner spokesman Brendan Buck said. “The president was offered a truly balanced approach … and he turned it down. His appetite for higher taxes knows no bounds.”
Boehner’s original proposal to the White House was to raise new tax revenue through an overhaul of the tax code — without raising rates. But Republicans say that while they still would still like to overhaul the tax code, any reform should not increase taxes.