GOP legislators sent a letter to the White House urging a “fiscal cliff” compromise drafted by a former chief of staff to President Bill Clinton.
The plan, sketched out by Erskine Bowles in November 2011, offers “a balanced approach of significant spending cuts and new revenues from tax reform with fewer loopholes and lower tax rates,” according to the afternoon letter from Speaker of the House John Boehner.
“This is another attempt to jumpstart substantive, good faith negotiations toward a bipartisan solution that can be enacted soon, a stark contrast to the unserious proposal the White House put forward last week,” the letter reads.
The letter was co-signed by Boehner’s top deputies, including Majority Leader Eric Cantor, Republican Conference Chairwoman Cathy McMorris Rodgers and Budget Committee Chairman Paul Ryan, who was Gov. Mitt Romney’s running mate in the 2012 election.
The letter wraps the GOP’s conciliatory position around Bowles, who Obama picked in 2010 to co-hair the National Commission on Fiscal Responsibility and Reform.
Bowles served as Clinton’s chief of staff, and ran for Senate as a Democrat. He’s a centrist liberal — not a progressive like Obama.
Both the GOP and the Democrats are trying to show the public they’re trying to compromise, in part because each wants to be able to blame the other during the 2014 mid-term elections.
That task is easier for the president because he was just re-elected and has support from a sympathetic media.
Bowles “recommended that both parties agree to a balanced package that includes significant spending cuts as well as $800 billion in new revenue… [that] 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,” the Boehner letter said.
“Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates… [and would] curt more than $900 billion in mandatory spending and another $300 billion in discretionary spending,” the letter continued.
The letter was sent in response to last week’s proposal from Obama.
Under that proposed 10-year fix, Congress would raise taxes by $1.6 trillion and launch a new stimulus costing at least $50 billion. His proposal did not detail any cuts, but invited Republicans to propose cuts adding up to $600 billion.
The debate over whether to cut spending by $600 billion would be conducted in the run-up to the 2014 mid-term elections.
Moreover, Obama’s conditional offer to cut $600 billion would trim roughly 1 percent of the federal government’s planned $45 trillion in spending over the next decade.
On Monday, Obama and his aides repeated their demand that the GOP end its opposition to tax-rate increases.
“We can reduce deficit in balanced way by ending tax cuts for top 2% + reforms that strengthen safety net & invest in future… If top rates don’t go up, danger that middle class deductions get hit,” Obama declared during an afternoon exchange on Twitter.
“Rates have to rise, and the Republicans need to acknowledge that,” White House spokesman Jay Carney declared during the Dec. 3 White House press conference. “That’s the only way to get from here to there,” he added.
“After a status quo election in which both you and the Republican majority in the House were re-elected, the American people rightly expect both parties to come together on a fair middle ground,” it began.
“We respectfully request that you respond to this letter in a timely fashion and hope that you will refrain from any further action that would undermine good-faith efforts to reach a reasonable and equitable agreement in this critical matter,” it concluded.
During a series of budget deals in 2010 and 2011, Democrats and Republicans agreed to delay a series of scheduled tax increases and spending cuts until Jan. 1 — past the 2012 election.
Unless they’re halted, those scheduled spending cuts and tax increases will drain $500 billion from the economy over the next 12 months, partly by raising taxes on middle-class families by roughly $2,000 per year.
That middle-class tax increase is caused by the planned expiration of President George W. Bush’s 2001 tax cuts, which Obama extended in 2010.
To head off this spending problem, House Republicans have agreed to remove many tax breaks used by wealthy Americans in exchange for cuts in Democratic-favored spending programs.
Under Obama’s presidency, the federal debt has grown to $11.4 trillion, prompting several credit-rating agencies to downgrade the nation’s credit in 2011 and 2012. Unless the annual deficit and accumulated debt are reined in, financial analysts predict a major economic crash even more ruinous than the 2008 crash.