The Fiscal Cliff Plan
December 4th 2012 22:27
Obama demands the House immediately pass a measure already approved by the Senate to extend tax cuts for families making less than $250,000 a year while allowing rates to return to higher Clinton-era levels for wealthier households.
Both sides agree that the 98% of Americans making less than $250,000 a year should avoid a tax hike when the tax cuts from the Bush administration expire on December 31, Obama and Democrats argue. They call for the House to guarantee that outcome by passing the Senate measure now.
Once that happens, Obama and Democratic leaders promise, they will work out compromises on other deficit reduction steps sought by Republicans, such as reforms to the Medicare and Medicaid entitlement programs as part of further spending cuts.
In an interview with Bloomberg TV broadcast Tuesday, Obama said Republicans need to accept the reality that deficit reduction requires higher tax rates on the wealthy.
"The issue right now, that is relevant, is the acknowledgment that if we're going to raise revenues that are sufficient to balance with the very tough cuts that we have already made and the future reforms in entitlements that I'm prepared to make, then we are going to have to see the rates on the top 2% go up, " the president said. "We will not be able to get a deal without it."
House Republicans led by Boehner made a major counter-proposal Monday, offering a series of steps to reduce the nation's chronic federal deficits by $2.2 trillion over 10 years.
The GOP leaders gave ground by calling for $800 billion in deficit reduction through tax reform, including an unspecified amount from eliminating some deductions and loopholes.
At the same time, they rejected the Democratic call for higher tax rates on wealthier Americans, contending the move would inhibit economic growth by raising taxes on small business owners, many of whom declare business profits on their personal income tax returns.
In a statement Tuesday, Boehner said Obama continued to offer solutions that had no chance of winning approval in the House or the Democratic-controlled Senate.
"If the president really wants to avoid sending the economy over the fiscal cliff, he has done nothing to demonstrate it," said Boehner, R-Ohio.
The White House and Democratic leaders immediately rejected the Republican approach, saying it would require middle-class taxpayers to assume a greater burden while easing rates on the rich.
"While their proposal may be serious, it is also a non-starter," Senate Democratic Leader Harry Reid said Tuesday. "They know any agreement that raises taxes on the middle class in order to protect more unnecessary giveaways for the top 2% is doomed from the start."
White House spokesman Jay Carney told reporters that the Republican stance represented progress, "but is not enough progress to achieve a deal."
Conservative Republican Sen. Tom Coburn of Oklahoma predicted rejection of the GOP proposal would doom any chance of an agreement.
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