Boehner’s tax offer to Obama lifts hope for fiscal cliff deal
Proposal to raise taxes on incomes topping $1 million met with optimism.
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.