Boehner’s tax of­fer to Obama lifts hope for fis­cal cliff deal

Pro­posal to raise taxes on in­comes top­ping $1 mil­lion met with op­ti­mism.

Austin American-Statesman - - THE SECOND FRONT - Byjackie Calmes and­jonathanweis­man

WASHINGTON — Speaker John Boehner’s lat­est of­fer to Pres­i­dent Barack Obama to al­low tax rates to rise on in­comes over $1 mil­lion has al­ready changed the terms of ne­go­ti­a­tions to avert a fis­cal cri­sis in Jan­uary, and both sides ex­pressed new op­ti­mism Sun­day that a deal could be reached this week.

In a phone call with Obama on Fri­day, the speaker, who had res­o­lutely op­posed al­low­ing in­come tax rates to rise on any­one, in­stead spoke in terms of prevent­ing taxes from ris­ing on ev­ery­one with a yearly in­come be­low $1 mil­lion. He also said he could ac­cept a deal that would raise $1 tril­lion in new rev­enues over 10 years, up from $800 bil­lion, if Obama com­mit­ted to sig­nif­i­cant sav­ings from ben­e­fit pro­grams like Medi­care, ac­cord­ing to peo­ple fa­mil­iar with the talks.

Also, in a big con­ces­sion, Boehner of­fered to ex­tend the debt limit for a year; Repub­li­cans have op­posed in­creas­ing the na­tion’s bor­row­ing limit, which must be done within weeks, to keep that as lever­age to force Obama’s ac­cep­tance of ad­di­tional spend­ing cuts in the new year.

Obama has low­ered his rev­enue de­mand from $1.6 tril­lion over 10 years to $1.4 tril­lion, and some Democrats have said his bot­tom line is $1.2 tril­lion. Even so, ad­min­is­tra­tion of­fi­cials char­ac­ter­ized the speaker’s over­ture as a sign of progress.

With Fri­day’s ex­change, the pres­i­dent and the speaker put aside their philo­soph­i­cal ar­gu­ment over whether higher tax rates would hurt “small busi­nesses” and “job cre­ators” and be­gan wran­gling only over price. While Repub­li­cans with knowl­edge of the talks said a deal was not im­mi­nent, they in­di­cated that it was close. “We are hope­ful,” one of the of­fi­cials fa­mil­iar with the talks said Sun­day.

The par­ties still are far apart on pos­si­ble changes to ben­e­fit pro­grams, es­pe­cially Medi­care, and new tax rev­enues that must be locked in right away through higher tax rates rather than later through an un­cer­tain tax re­form ef­fort.

Democrats were hos­tile Sun­day.

“The re­ported of­fer by Speaker Boehner on tax rates would lose al­most three-quar­ters of the rev­enue that could be gained by end­ing the Bush tax cuts for house­holds with in­comes over $250,000,” said Rep. Sander M. Levin of Michi­gan.

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