At first I thought this was a joke, sadly, it is not.
The first serious proposals from the White House to solve the looming “fiscal cliff” of tax rises and budget cuts appear to have been rejected out of hand by Republican leaders in Congress.
Treasury secretary Timothy Geithner is reported to have offered a set of proposals that include increasing tax rates on the wealthy, a one-year postponement of scheduled cuts in defence and domestic spending, and $400bn in savings from Medicare and other entitlement programmes.
The proposals from the White House – the first to use hard numbers – include a $1.6tn tax increase, a $50bn stimulus package and new presidential powers to raise the federal debt limit without congressional approval.
But based on public and private comments after their meetings, both House speaker John Boehner and Senate minority leader Mitch McConnell – the two most senior Republicans in Congress – brushed aside the proposals as incomplete.
Boehner said later: “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”
Boehner is said to have demanded matching spending cuts in return for raising the federal debt ceiling, which limits the total amount the US government can borrow. The Congressional Budget Office estimates it will be breached in February or March next year.
USA Today reports that three Republican congressional aides familiar with the president’s offer cast it as an “outrageous” proposal that surprised the speaker and has set back negotiations on how to avoid the fiscal cliff coming at the end of the year, when all of the Bush-era tax rates expire and the first of $1.2tn in spending cuts over 10 years are triggered.
Update: I doubt Geithner was surprised by McConnell’s reaction.
(Weekly Standard) — Mitch McConnell, the Senate Republican leader, says he “burst into laughter” Thursday when Treasury Secretary Tim Geithner outlined the administration proposal for averting the fiscal cliff. He wasn’t trying to embarrass Geithner, McConnell says, only responding candidly to his one-sided plan, explicit on tax increases, vague on spending cuts…
Geithner suggested $1.6 trillion in tax increases, McConnell says, but showed “minimal or no interest” in spending cuts. When congressional leaders went to the White House three days after the election, Obama talked of possible curbs on the explosive growth of food stamps and Social Security disability payments. But since Geithner didn’t mention them, those reductions appear to be off the table now, McConnell says.