GOP balks at plan from White House

$1.6 trillion in tax increases over 10 years proposed to avert fiscal crisis.

House Republicans said Thursday that Treasury Secretary Timothy Geithner presented House Speaker John Boehner a detailed proposal to avert the yearend fiscal crisis with $1.6 trillion in tax increases over 10 years, an immediate new round of stimulus spending, home mortgage refinancing and a permanent end to congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, was likely to meet strong Republican resistance.

In exchange for locking in the $1.6 trillion in added revenues, President Barack Obama embraced $400 billion in savings from Medicare and other entitlements, to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might well be outnumbered by spending increases, including at least $50 billion in infrastructure spending, mortgage relief and an extension of unemployment insurance.

“The Democrats have yet to get serious about real spending cuts,” Boehner said after the meeting.

Beneath the outward shows of frustration and rancor, Democrats said a deal could still come before hundreds of billions of dollars in automatic tax increases and spending cuts threaten the fragile economic recover next year.

Sen. Charles Schumer, D-N.Y., pointed to conservative Republicans who have publicly suggested the House quickly pass Senate Democratic legislation extending the expiring tax cuts for income below $250,000.

But publicly, neither side was giving an inch.

And Republican aides said the details of the White House proposal pointed to a re-elected president who believes he can bully Congress.

“They took a step backward, moving away from consensus and significantly closer to the cliff,” said Senate Republican leader Mitch McConnell.

The president’s proposal does stick to the broad framework of the deal Boehner wants: an upfront deficit-reduction “down payment” that would serve to cancel the automatic tax increases and spending cuts, while still signaling seriousness on the deficit, followed by a second stage when Congress works next year on overhauling the tax code and entitlements to secure more deficit reduction.

But the details show how far the president is ready to push House Republicans. The upfront tax increases in the proposal go beyond what Senate Democrats were able to pass earlier this year.

Tax rates would go up for higher-income earners, as in the Senate bill, but Obama wants their dividends to be taxed as ordinary income, something the Senate did not approve.

He also wants the estate tax to be levied at 45 percent on inheritances over $3.5 million, a step several Democratic senators balked at.

The Senate bill made no changes to the estate tax, which currently taxes inheritances over $5 million at 35 percent.