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