Obama, Boehner mak­ing progress

Pro­posal would trim hikes in So­cial Se­cu­rity.

Austin American-Statesman - - FRONT PAGE - By David Espo and Jim Kuhnhenn

WASHINGTON — Pres­i­dent Barack Obama has agreed to cur­tail fu­ture cost-of-liv­ing in­creases for re­cip­i­ents of So­cial Se­cu­rity and soft­ened his de­mand for higher taxes at up­per in­come lev­els as part of ac­cel­er­at­ing talks with House Speaker John Boehner to avoid a “fis­cal cliff,” peo­ple fa­mil­iar with the talks said Mon­day.

Speak­ing a few hours af­ter Obama and Boehner met at the White House, the of­fi­cials said the pres­i­dent was now seek­ing higher tax rates be­gin­ning at in­comes over $400,000 for cou­ples, down from the $250,000 level that was a cor­ner­stone of his suc-

cess­ful cam­paign for re­elec­tion.

Obama’s will­ing­ness to re­duce fu­ture cost-ofliv­ing in­creases in So­cial Se­cu­rity and numer­ous other government pro­grams marked a clear a con­ces­sion to Boehner, although it came with an as­ter­isk. The pres­i­dent wants lower-in­come re­cip­i­ents to re­ceive pro­tec­tion against any loss from scal­ing back fu­ture cost-of-liv­ing in­creases, th­ese of­fi­cials said.

Nor did Obama’s of­fer in­clude rais­ing the age of Medi­care el­i­gi­bil­ity from 65 to 67, a Repub­li­can goal that has drawn par­tic­u­larly strong ob­jec­tions from Demo­cratic lib­er­als.

Sev­eral of­fi­cials also said dur­ing the day that Boehner’s of­fer late last week to ac­cept higher tax rates in­cluded pro­vi­sions that would mean higher taxes on in­vest­ment in­come and divi- dends earned by wealthy Amer­i­cans.

The peo­ple who de­scribed the talks did so on con­di­tion of anonymity, cit­ing the se­cre­tive na­ture of the dis­cus­sions.

The ma­neu­ver­ing is aimed at reach­ing an agree­ment that would in­clude can­cel­la­tion of a sched­uled year-end hike in taxes for nearly all wage-earn­ers as well as spend­ing cuts at the Pen­tagon and in domestic pro­grams across the government.

Econ­o­mists in­side and out­side the government have warned that the com­bi­na­tion of the two, set to be­gin at year’s end, could send the econ­omy into re­ces­sion.

Other ma­jor is­sues are part of the ne­go­ti­a­tions. With­out ac­tion by Congress, for ex­am­ple, long-term un­em­ploy­ment ben­e­fits will ex­pire for mil­lions at the end of the year, and doc­tors will face a cut in the pay­ments they re­ceive for treat­ing Medi­care pa­tients.

Obama has also called for as­sis­tance for hard­pressed homeowners as well as fresh eco­nomic stim­u­lus mea­sures, and some Democrats want to in­clude a siz­able amount of dis­as­ter aid in any leg­is­la­tion to off­set the cost of Su­per­storm Sandy.

On an­other point, Obama’s lat­est of­fer dropped his ear­lier pro­posal to ex­tend a pay­roll tax cut due to ex­pire at year’s end.

At the White House, spokesman Jay Car­ney sidestepped when asked about curb­ing cost-ofliv­ing in­creases for ben- efit pro­grams. The pres­i­dent “is pre­pared to make tough choices. He also un­der­stands that his bill will not, as writ­ten, likely be what the fi­nal com­pro­mise, if there is one, looks like,” he said.

“But he in­sists and will in­sist be­fore he signed any­thing that there is the bal­ance that he seeks that is fair and that se­niors aren’t bear­ing the bur­den so that the healthy bear less — those who can af­ford it most bear less.”

A spokesman for Boehner de­clined com­ment on the tax pro­pos­als.

Obama and Trea­sury Sec­re­tary Tim Gei­th­ner met with Boehner and his top aides at the White House for less than an hour dur­ing the day. While nei­ther side pro­vided sig­nif­i­cant de­tails, Repub­li­cans have made it clear in re­cent days that it is the pres­i­dent’s turn to pro­pose sav­ings from Medi­care and other ben­e­fit pro­grams fol­low­ing Boehner’s agree­ment last week to let tax rates rise at in­comes higher than $1 mil­lion.

Of­fi­cials fa­mil­iar with the talks said that un­der the Ohio Repub­li­can’s pro­posal, the top tax rate on cap­i­tal gains would go to 20 per­cent, up from the cur­rent 15 per­cent. The top rate on div­i­dends also would climb, although it was not known what the new level would be, and the es­tate tax would also be ad­justed to pro­duce more government rev­enue.

Un­der cur­rent law, the top cap­i­tal gains tax rate would rise to 20 per­cent au­to­mat­i­cally at the end of the year if the cuts en­acted dur­ing Ge­orge W. Bush’s White House ten­ure were al­lowed to ex­pire.

The tax on div­i­dends would also rise. The es­tate tax would be 55 per­cent on es­tates af­ter al­lowance for a $1 mil­lion ex­emp­tion.

As the talks progress, Repub­li­cans across the party’s spec­trum are ea­ger to turn pub­lic at­ten­tion to­ward spend­ing cuts, rather than re­main bogged down in a po­lit­i­cally de­bil­i­tat­ing de­bate about tax in­creases.

“Our prob­lem isn’t that we tax too lit­tle. It’s that we spend too much! We must have se­ri­ous spend­ing cuts for a debt ceil­ing in­crease,” tweeted Rep. Tom Price., R-Ga.

That was a ref­er­ence to the third in­gre­di­ent un­der ne­go­ti­a­tion as part of deal to pre­vent the econ­omy from reach­ing the fis­cal cliff — an in­crease in the government’s bor­row­ing author­ity.

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