Republicans’ Counteroffer on Fiscal Crisis Blasted by White House

Republican leaders sent a letter to President Obama on Monday, proposing solutions to the debt crisis that include spending cuts of $1.4 trillion and an overhaul of the tax code that would raise $800 billion in revenue.

Republican Speaker of the House John Boehner was the author of the letter that proposed that over the next 10 years, there would be $2.2 trillion in deficit savings from tax reforms and cuts on health programs, mandatory and discretionary spending, and revisions to the cost of living index.

The White House rejected the letter as quickly and emphatically as Republicans dismissed Obama’s debt-reduction ideas a week ago.

“The Republican letter released today does not meet the test of balance,” White House Communications Director Dan Pfeiffer told reporters. “In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill.”

In Search of Middle Ground

Boehner’s letter, which was also signed by House Majority Leader Eric Cantor and House Budget Committee Chairman Paul Ryan, was a counteroffer to Obama’s plan, which called for raising taxes by $1.6 trillion; cutting Medicare spending by $400 billion; and adding $50 billion in stimulus spending.

Boehner, who called the $1.6 trillion tax hike a “la-la land offer, which couldn’t pass the House, couldn’t pass the Senate,” was enthusiastic about the Republican plan.

“What we are putting forward is a credible plan that deserves serious consideration by the White House,” Boehner told reporters Monday.

It doesn’t sound like he’ll get that.

Obama and the Democrats have made it clear that tax increases for the wealthiest 2 percent of Americans must be a part of any solutions to the so-called “fiscal cliff” crisis.

The Republican proposal keeps the Bush tax cuts in place for all taxpayers. It says the $800 billion in revenue will come from reducing deductions and closing tax loopholes, not from raising taxes.

“Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit,” Pfeiffer said.

Republicans have been just as determined to get spending cuts, especially in entitlement programs like Medicare and Social Security. Their proposal includes a revision in the cost of living index that would affect payouts for both Medicare and Social Security.

“If the president is rejecting this middle ground offer, it is now his obligation to present a plan that can pass both chambers of Congress,” said Brendan Buck, a spokesman for Boehner.

Bowles Plan Comes into Play

Republicans said in framing their plan, they were using numbers suggested last year by Erskine B. Bowles, former White House chief of staff and former co-chairman of the president’s deficit reduction task force.

“This is by no means an adequate long-term solution, as resolving our long-term fiscal crisis will require fundamental entitlement reform,” the letter to President Obama said. “Indeed, the Bowles plan is exactly the kind of imperfect, but fair middle ground that allows us to avert the fiscal cliff without hurting our economy and destroying jobs.”

Bowles quickly disassociated himself with the Republican proposal.

“While I’m flattered the speaker would call something ‘the Bowles plan,’ the approach outlined in the letter Speaker Boehner sent to the president does not represent the Simpson-Bowles plan, nor is it the Bowles plan,” Bowles said in a statement. “In my testimony before the Joint Select Committee on Deficit Reduction, I simply took the mid-point of the public offers put forward during the negotiations to demonstrate where I thought a deal could be reached at that time. The Joint Select Committee failed to reach a deal, and circumstances have changed since then. It is up to negotiators to figure out where the middle ground is today.”

Polls say GOP is on the Hook

The Republican proposal could be a response to recent polls that suggest voters will hold the GOP responsible if a debt-reduction deal is not made by the Dec. 31 deadline.

A Pew Center/Washington Post poll showed 53 percent of Americans believe congressional Republicans would be more to blame if a deal is not reached, while just 27 percent would mostly blame Obama.

A CNN/ORC International Poll released last week showed that 56 percent of respondents said higher taxes were a fair tradeoff if it helps lower-income people, while 36 percent said taxes should be kept low to create jobs.

Two-thirds of the respondents to a survey by ABC News and The Washington Post said they support Obama’s call for holding down tax rates for everyone except the wealthiest Americans.