* Obama makes counteroffer to resolve fiscal cliff - source
* Boehner sees offer as flawed but positive step - aide
* Taxes would rise only on earners about $400,000 in new bid
By Mark Felsenthal
WASHINGTON, Dec 17 In a major counteroffer that
moves the White House and congressional Republicans closer to
resolving the "fiscal cliff" standoff, President Barack Obama is
now seeking $1.2 trillion from higher tax revenues, including
increased rates on those earning more than $400,000 a year, a
source familiar with the negotiations said on Monday.
In exchange, the president is willing to agree to $1.22
trillion in spending reductions, including some cuts achieved by
changing the way cost of living adjustments are made to Social
Security retirement benefits and other programs. By raising the
threshold for tax increases to $400,000 from $250,000, the
president is yielding on the level he had sought during his
successful campaign for re-election in November
"We view this as a good offer that shows we have met the
Republicans more than halfway on spending and halfway on
revenues," the source said.
House Speaker John Boehner's office called the president's
bid a positive, if flawed step toward a compromise on an impasse
that many -- from governments to businesses to private citizens
-- have been urging the two sides to resolve.
"Any movement away from the unrealistic offers the President
has made previously is a step in the right direction, but a
proposal that includes $1.3 trillion in revenue for only $930
billion in spending cuts cannot be considered balanced," Boehner
spokesman Brendan Buck said.
Obama's spending reduction proposal counts $290 billion in
interest among spending reductions, and does not count an
estimated $90 billion in increases in revenue from cost of
living adjustments, hence the different numbers.
"We hope to continue discussions with the president so we
can reach an agreement that is truly balanced and begins to
solve our spending problem," Buck said.
The proposal comes as the president and Boehner seek to iron
out differences in an effort to stop automatic tax increases and
spending cuts from going into effect early next year. Analysts
have warned that the abrupt shock could knock the economy back
Apparent concessions by the president, who originally
proposed $1.6 trillion in new tax revenues, and the House
speaker's willingness to entertain the proposal, raised hopes
that the two sides can find a way to avoid the dreaded fiscal
"Everyone I talk to is increasingly optimistic that folks
are more serious about a deal -- maybe Dec. 24 or 31, but a deal
nevertheless. We'll see," a lobbyist for a major U.S. financial
services firm said.
The president's latest offer shows him willing to give on an
item that some of his supporters had sought to protect --
linking Social Security benefit increases to the chained
consumer price index, a step that would lead to lower payments.
"The chained CPI would be a growing benefit cut that is
most harmful for the oldest and poorest beneficiaries of Social
Security," said Dave Nathan, a spokesman for AARP, which
represents older Americans.
However, the president's proposal would seek to protect
those on whom that change would fall hardest, the source said.
The chained, or superlative, CPI, is considered a more
accurate gauge of inflation that the government began to report
in 2002. It is estimated to be 0.22 percentage points lower than
the traditional CPI.
Obama's offer asks for Congress to increase the national
borrowing ceiling for two years using a parliamentary procedure
proposed by Senate Republican leader Mitch McConnell. That
demand may be a hard sell for many lawmakers who may be
reluctant to relinquish power over the nation's purse strings.
The president's offer also would seek to provide the
sluggish economy a boost by extending unemployment benefits and
increasing infrastructure spending.
Obama's proposal would stop harsh automatic spending cuts
due to go into effect under the sequestration process. However,
some automatic cuts would continue to hang over the
administration and Congress's heads as a prod to work out
further budget reforms.
The president's proposal calls for "fast track processes"
for further tax and spending reforms, the source said.
A senior Republican congressional aide familiar with the
negotiations said that while there were "substantive
differences" with the White House, he still was hopeful "that we
can at some point get to a framework that allows us to move
forward on tax and entitlement reform."
The aide emphasized that negotiations with the White House
had not yet gotten into detailed discussions on potentially
complicated reforms to the tax code and big social programs like
Medicare and Medicaid.
For example, the aide said no decisions had been made on
where Medicare and Medicaid savings would come from -
beneficiaries or medical providers.
"All that is still to be decided," the aide said.