Dec 3, 2012 No Comments ›› Infidel
Excerpted from The Washington Post: House Republican leaders on Monday endorsed a far-reaching plan to rein in the national debt that that would raise $800 billion in new tax revenue, slice $600 billion from federal health programs and apply a stingier measure of inflation to Social Security benefits.
In a letter to President Obama, House Speaker John A. Boehner (R-Ohio) and other senior Republicans suggested that the framework – first laid out by Democrat Erskine Bowles during last year’s budget battles – should serve as a starting point for budget talks aimed at averting the year-end fiscal cliff.
“With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and the Senate, and be signed into law in the next couple of weeks,” the letter says. “The best way to do this is by learning from and building on the bipartisan discussion that have occurred [earlier in] this Congress.”
The framework serves as a counter-offer to the plan Obama laid on the table last week, essentially a reprise of his most recent budget request. While both frameworks would reduce borrowing by more than $4 trillion over the next decade, Obama’s proposal would raise $1.6 trillion in fresh revenue – double the GOP plan – and produce only about $350 billion in savings from Medicaid and Medicare, the biggest drivers of future borrowing.
Republicans were outraged by the proposal, calling it a step backward on the path to compromise. On Monday, Boehner referred to it as the president’s “la-la land offer.” Senior GOP aides said the equivalent response would have been slapping the House Republican budget on the table, an austere document that cuts deeply into the social safety net and would actually cut tax collections further.
“We could have responded in kind. But we decided not to do that,” Boehner told reporters. “What we’re putting forth is a credible plan that is worth serious consideration.”
The proposal marks the first time Republican leaders other than Boehner have explicitly and publicly backed new tax revenue. In addition to Boehner, the letter is signed by Majority Leader Eric Cantor (R-Va.), Whip Kevin McCarthy (Calif.), Ways and Means Chairman Dave Camp (Mich.) and Budget Committee Chairman Paul Ryan (Wisc.).
The proposal calls for $800 billion in higher tax collections through an overhaul of the tax code next year that would push the top rate below the current 35 percent and raise cash by wiping out loopholes and deductions.
The plan also seeks $600 billion in health savings; one option, GOP aides said, would be raising the Medicare eligibility age from 65 to 67. It also includes $300 billion in savings from other mandatory programs, such as farm subsidies. And it would save $200 billion by applying a less generous measure of inflation government wide, including to Social Security benefits, which would rise more slowly as a result.
The GOP plan also seeks another $300 billion in cuts to agency budgets on top of the $1 trillion in cuts already enacted. All told, it would produce $2.2 trillion in new savings – or $4.6 trillion when measured against the same yardstick as the president’s proposal.
The offer makes to mention of how to handle the looming battle over the federal debt limit, nor does it offer suggestions for how the deficit-cutting framework would be put into place. However, aides said that the offer does not come with an agreement to let the top tax rate rise to 39.6 percent in January, as Obama prefers.