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White House Rejects GOP "Fiscal Cliff" Proposal

Elizabeth Johnson |
December 3, 2012 | 2:12 p.m. PST

Executive Producer

 "The White House needs to get serious" regarding the fiscal cliff. (Gage Skidmore/Creative Commons)
"The White House needs to get serious" regarding the fiscal cliff. (Gage Skidmore/Creative Commons)

The White House is rejecting the GOP proposal to avert the impending "fiscal cliff," saying that it does not meet the "test of balance." The director of White House communications, Dan Pfeiffer, said the counteroffer would lower tax rates for the wealthy while raising taxes for middle class Americans.

The offer, outlined in a letter to the White House, included a proposed deficit reduction of $4.6 trillion over 10 years, without raising taxes for the wealthiest Americans. The plan also proposed an increase in the eligibility age for Medicare, but did not specify what the new age would be.

"What we are putting forth is a credible plan that deserves serious consideration by the White House," said House Speaker John Boehner (R., Ohio) in a briefing for reporters before the proposal was rejected.

READ MORE: Geithner And Boehner In Stalemate As Fiscal Cliff Crisis Nears

The proposal is based on a 2011 budget plan by Erskine Bowles, a Democrat who has been working towards a bipartisan budget plan for tax-reductions. 

"The House Republican leadership put forward a Bowles framework that, unlike the unserious, bait-and-switch proposal the president floated last week, is ground from which to build toward significant deficit reduction while beginning to reform and strengthen our entitlement programs—without harming jobs and economic growth," said Senate Minority Leader Mitch McConnell.

According to USA Today:

The House Republicans' proposal calls for $800 billion in new revenue achieved through closing loopholes and capping deductions; $900 billion in health care and other mandatory spending cuts; $300 billion in spending cuts for discretionary spending, which includes social programs such as food stamps; and $200 billion gained by changing the way the government calculates cost-of-living adjustments for Social Security and Medicare.

The proposal comes after several days of standoff between the two groups, with leaders from both reiterating their bottom lines in interviews Sunday. President Obama insists that no deal can be reached without raising tax rates for Americans in the top two income tax brackets, while Republican House members believe that deficit reduction can be reduced by closing loopholes and deductions rather than raising taxes.

President Obama submitted his first offer last week, which was promptly rejected by Boehner. The plan called for a $1.6 trillion tax increase, $50 billion in infrastructure spending in 2013 and added power to increase the federal debt limit. 

"What the president believes is that you cannot mathematically achieve the kinds of revenue that are necessary for that balanced approach through any other means. So rates have to rise. And the Republicans need to acknowledge ... that's the only way to get from here to there," White House spokesman Jay Carney said at Monday’s briefing.

READ MORE: White House Warns About "Fiscal Cliff"

Unless a plan is approved, the “fiscal cliff” at the end of the year will see the expiration of George W. Bush-era tax rates and the triggering of $1.2 trillion in spending cuts over 10 years.

READ MORE: President Obama Answered Fiscal Cliff Questions On Twitter

Meanwhile, the White House is continuing its contingency plan of a public campaign to spur fiscal cliff agreements. President Obama hosted a Twitter Town Hall Monday to answer questions and encourage citizens to contact their representatives regarding the expansion of middle-class tax cuts. He also introduced the hashtag "#my2k" last week, referring to the $2,000 an average family would pay in additional taxes should an agreement not be reached.

Read more Neon Tommy coverage of the “fiscal cliff” here.

Reach Executive Producer Elizabeth Johnson here. Follow her on Twitter here.



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