President Barack Obama quickly spurned House Speaker John Boehner’s latest compromise offer, as the federal government continues its scheduled progress toward the $500 billion so-called fiscal cliff in January.
The rejection came Sunday, two days after Boehner had offered to raise tax rates for Americans earning more than $1 million per year.
News of Boehner’s compromise will likely spur protest by the GOP’s small-government wing.
On Friday, Boehner also proposed to raise the government’s debt limit by roughly $1 trillion over its current level of $16.3 trillion. That’s also controversial, because Republican advocates of smaller government want to use Congress’ control over the debt-limit to curb the federal government’s 10-year $45 trillion spending plan. (RELATED: Boehner offers millionaire tax hike)
Obama’s rapid spending — he has raised the national debt by $5.7 trillion since 2008 — means that he must persuade Congress to raise the debt ceiling again in the next few months.
Boehner’s Friday proposal would have transferred another $460 billion from roughly 400,000 investors and entrepreneurs to the federal government by raising their top marginal income tax rate from 35 percent to 39.6 percent.
Other federal, state and local taxes lift the effective tax rate on top earners to well over 50 percent.
GOP leaders and many economists say such high tax rates shrivel investment, hurt job creation and curb tax revenues.
But Obama didn’t consider Boehner’s $460 billion offer big enough, even when combined with the House speaker’s previous offer to cut several hundred billion dollars in tax breaks used by upper-income Americans, according to a White House official cited by The Washington Post.
The Friday offer, which would have raised $1 trillion in new government revenue over 10 years, was accompanied by proposed reforms to trim spending by $1 trillion over the course of the same decade.
The proposal would have trimmed $2 trillion from the projected $9 trillion in deficit borrowing that is scheduled to fund the federal government’s current 10-year, $45 trillion spending plan.
Obama wants the federal government to tax an extra $1.4 trillion of the nation’s wealth by 2022, and has repeatedly declined to specify spending he would agree to cut.
Meanwhile, the White House has demanded that the GOP “acknowledge” that higher tax rates are needed.
This demand for the GOP to abandon its ideological principle against higher tax rates is itself a ideological demand from Obama, and spotlights his gamble that November’s election results can help him win a long-lasting ideological victory over his Republican adversaries.