Obama's opening "fiscal cliff" bid seeks debt limit hike, stimulus

WASHINGTON Thu Nov 29, 2012 7:18pm EST

U.S. Treasury Secretary Timothy Geithner arrives at the U.S. Capitol Building before a meeting with House Minority Leader Nancy Pelosi (D-CA) on Capitol Hill in Washington D.C. November 29, 2012. REUTERS/Benjamin Myers

U.S. Treasury Secretary Timothy Geithner arrives at the U.S. Capitol Building before a meeting with House Minority Leader Nancy Pelosi (D-CA) on Capitol Hill in Washington D.C. November 29, 2012.

Credit: Reuters/Benjamin Myers

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WASHINGTON (Reuters) - The Obama administration's opening bid on Thursday in negotiations to avert a year-end fiscal crunch included a demand for new stimulus spending and authority to unilaterally raise the U.S. borrowing ceiling, a Republican congressional aide said.

The proposal, made by Treasury Secretary Timothy Geithner to congressional Republican leaders on Capitol Hill, was seen as offering little the Republicans could agree to and was greeted with laughter, the aide said.

"We can't move any closer to them because they're not even on our planet," the aide said. "It was not a serious proposal."

Obama and congressional Republicans are returning to the bargaining table to prevent across-the board tax increases and deep spending cuts, the so-called fiscal cliff, from taking effect next year.

The president wants Bush-era tax breaks to be extended for all but the wealthiest earners, but Republicans have balked at tax hikes of any kind.

In the maiden bargaining session, Geithner, the president's lead negotiator, proposed raising tax revenues by $1.6 trillion, congressional aides confirmed. That figure is in line with what Obama has said is necessary to achieve long-term deficit reduction of $4 trillion over 10 years.

The administration also sought at least $50 billion in new economic stimulus spending.

Obama's negotiators also sought the ability to raise the nation's borrowing limit unilaterally. Currently, Congress must approve an increase in the debt ceiling, and it was an impasse over that issue that brought the country perilously close to default in 2011.

The administration's proposal would put off across-the-board spending cuts for a year.

In exchange the administration agreed to make $400 billion in spending cuts to entitlement programs, an aide confirmed.

The White House had no comment on the details of the offer.

"The only thing preventing us from reaching a deal that averts the fiscal cliff and avoids a tax hike on 98 percent of Americans is the refusal of congressional Republicans to ask the very wealthiest individuals to pay higher tax rates," a White House official said.

(Reporting by Steve Holland and Mark Felsenthal)

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Comments (10)
TheNewWorld wrote:
“….included a demand for new stimulus spending and authority to unilaterally raise the U.S. borrowing ceiling, a Republican congressional aide said.”

No. No more spending. We did $1.1 trillion of stimulus spending in 2012. We have to pay $400 billion in 2012 for the interest on all of this stimulus spending. You can have your tax hikes, but in return you get no additional money to spend. You bring in $2.4 trillion a year in taxes, make it work.

For all of the Democrats out there that wonder why fiscal conservatives are against tax hikes, this is it. Higher taxes = more money for Democrats to spend irresponsibly. The President absolutely refuses to observe anything close to a balanced budget, and is already calling for more stimulus spending. He is going to bankrupt the nation. If you have kids or grand kids, and you voted for Obama, you owe them a huge apology.

Nov 29, 2012 8:04pm EST  --  Report as abuse
xyz2055 wrote:
This is just political theatre…on both sides. They are essentially arguing over 3 things..Bush Era Tax Cuts, Medicare and Medicaid. While I don’t agree with everything in TheNewWorld’s comment..I do agree that we don’t need more stimulus spending. GDP numbers were just revised upwards this week. The economy will recover better on it’s own that a bunch of politicians tinkering with it and wasting more money. Folks..this is simple. Agree on how much you want to cut the deficit each year over the next 10 years, agree on what percent will be taxes and what percent will be cuts..and do it across the board. Everybody kicks the same amount into the kitty (spending cuts). Honing in on the Bush Era tax cuts is one dimensional. Our tax code is more screwed up than that. Oil companies don’t need a subsidy, GE ought to pay at least something in taxes and Apple can afford more than it’s current 7% tax rate. I agree with the Republican’s on this one. Limit deductions and close loopholes that are targeted at the most profitable individuals and companies in this country. Cherry picking is getting us nowhere.

Nov 29, 2012 10:01pm EST  --  Report as abuse
TheNewWorld wrote:
@xyz2055

For the record I am for cutting the Bush tax cuts, all of them. I know my taxes will go up. I want a balanced budget. If you want businesses and financial markets to have any sort of confidence, we have to get the deficit cut at least in half. A $550 billion deficit is still huge, but it shows us going in the right direction. All deficit spending is “stimulus”. It is money that we do not have being pumped into programs we can’t afford.

I can’t find a Democrat that seems to care about $16 trillion in debt, or understands that debt gets paid back with interest. $400 billion of our taxes went to interest payments last year. We spend $600 billion on defense. The Democrats are for us paying more in interest than on education, defense, food stamps, etc. They just don’t realize that is what they are ultimately doing to the country and their children.

Nov 29, 2012 10:44pm EST  --  Report as abuse
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