Last week, the White House tried (or at least, tried to appear like they were sincerely trying) to grease the skids on the fiscal cliff negotiations with a proposal that included $1.6 trillion in new taxes and the virtual elimination of the debt ceiling — a proposal to which Republicans responded with open laughter.
On Monday, the House GOP counter-offered their own jumping-off point, calling for $800 billion in new revenue via tax-code reform and spending cuts and entitlement reforms that would trim off a couple trillion from the budget. Looks like Mary Katharine and Guy Benson came pretty close to calling it, with some variation. Via The Hill:
House Republican leaders have made a counteroffer to President Obama in the fiscal cliff negotiations, proposing to cut $2.2 trillion with a combination of spending cuts, entitlement reforms and $800 billion in new tax revenue.
The leaders delivered the offer to the White House on Monday with a three-page letter signed by Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), and four other senior Republicans, including Rep. Paul Ryan (R-Wis.), the party’s just-defeated vice presidential nominee.
Republican officials said the offer was based on a proposal outlined by Erskine Bowles, the former chief of staff to President Bill Clinton, in testimony last year before the congressional “supercommittee” on deficit reduction. That offer is distinct from the widely-cited Simpson-Bowles deficit plan released two years ago.
And, in Boehner’s own words:
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 best way to do this is by learning from and building on the bipartisan discussions that have occurred during this Congress, including the Biden Group, the Joint Select Committee, and our negotiations leading up to the Budget Control Act.
For instance, on November 1 of last year, Erskine Bowles, the co-chair of your debt commission, presented the Joint Select Committee with a middle ground approach that garnered praise from many fiscal watchdogs and nonpartisan experts. He recommended that both parties agree to a balanced package that includes significant spending cuts as well as $800 billion in new revenue.
Notably, 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. Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates. On the spending side, the Bowles recommendation would cut more than $900 billion in mandatory spending and another $300 billion in discretionary spending. These cuts would be over and above the spending reductions enacted in the Budget Control Act.
This is by no means an adequate long-term solution, as resolving our long-term fiscal crisis will require fundamental entitlement reform. 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. We believe it warrants immediate consideration.
If you are agreeable to this framework, we are ready and eager to begin discussions about how to structure these reforms so that the American people can be confident that these targets will be reached.
Consider the example of a $25,000 cap on itemized deductions, which some claim would raise in the range of $1 trillion or more from high-income households:
- Limiting the cap to those with incomes over $250,000 leaves only $800 billion in revenue. A $25,000 cap that applied to all households would raise taxes by an average of $2,400 on 17 million households with incomes below $250,000 ($200,000 for singles). Treasury estimates show that about 40 percent of the revenue from such a cap would come from these households. Thus, the amount of revenue that could be raised from taxpayers making more than $250,000 is only about $800 billion.
The Democrats have been insisting that major entitlement reform is not on the table, and their desire to not go over the fiscal cliff is becoming highly suspect. They’ve been rabble-rabble-rabbling about how Republicans need to introduce a concrete negotiating platform of their own, so here it is, and Republicans have now officially outlined the specific concessions they’re willing to make on increasing revenue (which is, by the way, a huge concession in and of itself that Democrats have hardly deigned to notice). Will they finally come to the table in good faith?
Update: I’m going to further ponder my own exit question here — Guy Benson has more on the politics of it all, and as he points out, the Republicans need to get crackin’ on getting the media to sit up and take notice. They’ll have to come in loud and clear that they’ve produced a mature, serious plan that has something for everybody, avoiding both the fiscal cliff and the extent of economic damage that we’d see with Obama’s plan — so the Democrats can feel free to quit pointing fingers any time now.