$2.2 Trillion Counteroffer Sent To President Obama

Earlier today, House Speaker John Boehner and six other Republican members of the House of Representatives sent President Obama a three page letter that outlined their "fiscal cliff" counteroffer.

House GOP members have put forward a $2.2 trillion proposal that would include reforms to Medicare and Medicaid, "hundreds of billions" of dollars in savings in "other mandatory spending" (including reforms to Federal employee compensation and the Supplemental Nutrition Assistance Program) and $800 billion in new revenues from "pro-growth tax reform" that would close "special-interest loopholes and deductions while lowering rates".

Republicans have been staunchly opposed to increased tax rates, which was a fundamental part of the Obama proposal that was put forward last week. In their letter to President Obama, House Republicans said that that "continue to oppose" higher tax rates and that they will not agree to them "to protect small businesses and our economy".

Some of the key components of the Obama plan:

1. $1.6 trillion in increased tax revenues over 10 years, which would include the expiration of the Bush tax cuts for the top 2% of tax payers

2. The extension of the payroll tax credit or the implementation of a similar stimulus

3. The extension of emergency unemployment benefits

4. $50 billion in new infrastructure spending

5. $400 billion in unspecified entitlement program cuts

6. The blocking of the automatic spending cuts

According to Politico.com, the main components of the House Republican plan:

1. $800 billion in increased government revenue through tax reform

2. $800 billion in health savings and "changes to an inflation formula that determines benefit levels across government programs"

3) $600 billion in other savings split between mandatory and discretionary spending

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President Obama believes that he has a mandate from the American people to increase taxes on the wealthy, while the Republican side remains steadfastly opposed to any increase in the tax rate.

The two sides are running out of time to figure it out, as a deal must be agreed to by the end of the year in order to avoid the potentially disastrous "fiscal cliff."

Source: Speaker.gov - Letter to White House (*.pdf)

Filed under: General Knowledge