GOP 'Fiscal Cliff' Plan Echoes Failed Budget Talks

This Nov. 29, 2012, photo shows House Speaker John Boehner of Ohio speaking to reporters on Capitol Hill in Washington.
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Monday's Republican plan contains few specifics and anticipates that myriad details would have to be filled in next year in legislation overhauling the tax code and curbing the growth of benefit programs.

Though the GOP plan proposes to raise $800 billion in higher tax revenue over the same 10 years, it would keep the Bush-era tax cuts — including those for wealthier earners targeted by Obama — in place for now.

GOP aides said their plan was based on one presented by Erskine Bowles, co-chairman of a deficit commission Obama appointed earlier in his term, in testimony to a special deficit "supercommittee" last year.

"The new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy," Boehner and fellow Republicans said in a letter to Obama. "Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates."

By GOP math, the plan would produce more than $2 trillion in budget savings over the coming decade: $800 billion in higher taxes; $600 billion in savings from costly health care programs like Medicare; $300 billion from other proposals such as forcing federal workers to contribute more toward their pensions; and $300 billion in additional savings from the Pentagon budget and domestic programs funded by Congress each year.

Boehner signaled in discussions with Obama in 2011 that he was willing to accept up to $800 billion in higher tax revenues, but his aides maintained that much of that money would have come from so-called dynamic scoring — a conservative approach in which economic growth would have accounted for much of the revenue. Now, Boehner is willing to accept the estimates of official scorekeepers like the Congressional Budget Office, whose models reject dynamic scoring.

Using the administration's math, GOP aides said, the plan represents $4.6 trillion in 10-year savings. That estimate accounts for earlier cuts enacted during last year's showdown over lifting the government's borrowing cap and also factors in war savings and lower interest payments on the $16.4 trillion national debt.

Last week, the White House delivered to Capitol Hill its opening proposal: $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit without the approval of Congress.

In exchange, the president would back $600 billion in spending cuts, including $350 billion from Medicare and other health programs. But he also wants $200 billion in new spending for jobless benefits, public works projects and aid for struggling homeowners. His proposal for raising the ceiling on government borrowing would make it virtually impossible for Congress to block him going forward.

One of the few things the White House and Capitol Hill Republicans can agree on is a framework that would make a "down payment" on the deficit and extend all or most of the expiring Bush-era tax cuts but leave most of the legislative grunt work until next year.

Other participants in the Tuesday meeting between Obama and the governors included Republicans Gary Herbert of Utah and Scott Walker of Wisconsin and Democrats Mike Beebe of Arkansas and Mark Dayton of Minnesota.

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Associated Press writers Julie Pace and Ken Thomas contributed to this report.

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