U.S. 'pretty close' on terms of fiscal deal: Obama
House Speaker John Boehner of Ohio listens during a news conference on Capitol Hill in Washington on Wednesday, Dec. 12, 2012, following a closed-door meeting with the GOP caucus. (AP Photo/J. Scott Applewhite)
The Associated Press
Published Wednesday, December 19, 2012 10:32AM EST
Last Updated Wednesday, December 19, 2012 1:40PM EST
WASHINGTON -- President Barack Obama says he and Speaker John Boehner are "pretty close" to a grand deal that would avoid a "fiscal cliff," even as talks have ground to a standstill with just days left before broad tax increases and steep spending cuts take effect.
Obama says that in the aftermath of the Newtown, Conn., massacre of school children, the country deserves a compromise by the nation's political leaders. He urged lawmakers to "peel off the partisan war paint" and strike a deal.
Of congressional Republicans, he said: "they keep on finding ways to say no, instead of finding ways to say yes."
Obama spoke to reporters after announcing a broad administration-wide response to Friday's shooting at an elementary school that killed 26 people including 20 first graders.
His comments came shortly after the White House threatened Wednesday to veto Boehner's backup plan for averting the "fiscal cliff." Boehner's measure, a so-called Plan B, would block tax increases from being triggered Jan. 1 on everyone but those whose incomes exceed $1 million.
The White House said Boehner's package did not raise enough revenue from the country's top earners, would leave too big a deficit-reduction burden on the middle class and omitted tax breaks used by families and businesses.
"I'd like to get it done before Christmas," Obama said. "There's been a lot of posturing up on Capitol Hill instead of going ahead and getting stuff done, and we've been wasting a lot of time."
Boehner is planning a House vote on his proposal on Thursday, hoping it would raise pressure on President Barack Obama to make concessions as both sides continue reaching for a bipartisan deal on averting the "fiscal cliff." Without an agreement among lawmakers, broad tax increases on nearly all taxpayers and budget-wide spending cuts will be triggered in early January.
Boehner spokesman Brendan Buck said White House opposition to the GOP backup plan "is growing more bizarre and irrational by the day." He said Republicans prefer a deficit-cutting plan that is balanced between tax increases and spending cuts, but Obama has yet to offer such a proposal.
"If Democrats disapprove of this bill, then there is a simple solution: amend it in the Senate and send it back to the House," Buck said in a written statement.
Senior administration officials said there have been no talks advancing the negotiations on a big fiscal cliff deal since Monday, after Boehner called Obama to say he was going to take a Plan B to the House. The officials spoke on condition of anonymity, citing the sensitivity of the negotiations.
In the absence of a deal with Obama, Boehner's Plan B is attracting support from Republicans eager to cast a vote preventing tax increases on as many people as possible.
Obama's latest offer -- focusing tax boosts on incomes above $400,000 -- would affect nearly 1.1 million taxpayers. Limiting the tax boosts to income exceeding $1 million would target just 237,000 households, according to the latest Internal Revenue Service figures for 2009.
Boehner's backup plan could serve other purposes besides letting GOP supporters vote to protect more than 99 per cent of taxpayers from paying higher levies.
Allowing a vote on Plan B might increase GOP support for a negotiated compromise with Obama. Some Republicans might feel more comfortable supporting an accord with Obama -- which would likely include more tax increases than they want -- after being given a chance to vote for Boehner's narrower tax increase on millionaires because it would let them show voters that they preferred a smaller tax boost.
Even so, House GOP leaders are labouring to line up enough support for the backup measure in the face of conservatives reluctant to boost anyone's taxes. Even if it could survive in the House, Senate Majority Leader Harry Reid, D-Nev., has declared it dead in his chamber and now the White House has promised to veto it should it somehow reach Obama's desk.
The backup plan by Boehner would do nothing to head off deep cuts in defence and domestic programs scheduled to begin taking effect in January. And it contains none of the spending reductions that both Obama and Boehner have proposed in their efforts to strike a compromise.
"The speaker is trying to get as much leverage as he can to deal with the president," said Rep. Charles Boustany, R-La., describing the pressure Republicans were hoping it would put on the White House. But he added that he wasn't sure the plan was the best way to get that leverage.
"I'm still trying to figure that out," Boustany said.
Others were more supportive. Rep. Patrick Tiberi, R-Ohio, said Plan B would let Republicans vote to protect as many people as possible from tax hikes while leaving Democrats with the blame if it failed.
If the Senate decides not to vote on the House bill or ignores it, "That's not our problem," Tiberi said. "The ball's in Harry Reid's court."
Besides letting tax rates rise only on incomes exceeding $1 million, Boehner's Plan B also would boost the top rate on capital gains and dividends from their current 15 per cent to 20 per cent for earnings over $1 million, preventing higher increases. It would continue current tax levels on inherited estates -- less than Obama wants -- and prevent the alternative minimum tax from raising taxes owed by 28 million middle- and upper-class families.
Boehner unveiled his backup plan on Tuesday. He did so even though he and Obama have come tantalizingly close to finding a politically palatable combination of revenue increases and budget savings that could slice around $2 trillion from projected federal deficits over the coming decade.
Both sides say those efforts will continue.
Obama has reduced his demands for tax increases to $1.2 trillion over 10 years, to be imposed on incomes exceeding $400,000 annually. In so doing, the president abandoned his campaign season insistence that he would raise taxes on individuals earning over $200,000 and couples making more than $250,000.
Boehner has boosted his revenue offer to $1 trillion, including raising income tax rates on incomes over $1 million. That is a major concession from the leader of a party that has made opposition to higher rates a fundamental tenet for a quarter century.
"I think it's a mistake for the Republican Party," said Rep. Jim Jordan, R-Ohio, a leader of House conservatives. "So that's what I think a lot of members are struggling with."
Obama has also departed from his party's orthodoxy by proposing smaller annual cost-of-living increases for Social Security recipients. The new formula for measuring inflation would affect other benefit programs as well and push more people into higher income tax brackets.
The president's embrace of a plan that would over time cut Social Security benefits has aroused outcries from liberal groups that defend programs for the elderly and poor and that generally support Democrats.
"I promise you, seniors and their families will notice" the benefit reductions, said Pamela Tainter-Causey, spokeswoman for the National Committee to Preserve Social Security and Medicare, one of scores of groups mobilizing opposition to the proposal.
Obama also was pushing for extended unemployment benefits and billions in spending aimed at stimulating the economy.
The president says his plan would cut spending by $1.2 trillion over a decade, including saving $400 billion from health care benefits that could include Medicare for the elderly and Medicaid for the poor.
Boehner wants deeper Medicare savings. And he says Obama is more unbalanced, seeking $1.3 trillion more in taxes and $930 billion in lowered spending.