President, Boehner trade budget offers

House Speaker John Boehner made “a counteroffer” to President Barack Obama’s proposed tax increases, a spokesman said Tuesday.

House Speaker John Boehner made “a counteroffer” to President Barack Obama’s proposed tax increases, a spokesman said Tuesday.

Wednesday, December 12, 2012

— President Barack Obama and House Republicans traded budget proposals intended to avert spending cuts and tax increases scheduled to begin in January.

Obama and House Speaker John Boehner spoke Tuesday as they exchanged offers, according to a Republican congressional aide and an administration official, both of whom spoke on condition of anonymity about the private negotiations.

Obama, interviewed on ABC News, said, “I remain optimistic” that a budget agreement will be reached. He said he is “pretty confident” Republicans will give in to his demand for higher tax rates for top earners.

If Congress does nothing, more than $600 billion in tax increases and spending cuts, the “fiscal cliff,” will start taking effect in January.

The Obama administration reduced its demand for new tax revenue from $1.6 trillion to $1.4 trillion, said a second Republican congressional aide who wasn’t authorized to speak publicly about the talks.

That person and a third Republican staff member said Boehner’s counteroffer kept the same $800 billion revenue figure he proposed earlier, to come from limiting tax deductions and not from higher tax rates. The aides said the offer included only minor changes from Republicans’ previous proposal to protest what they viewed as a lack of movement by the White House.

White House officials didn’t respond to requests for comment.

“We sent the White House a counteroffer that would achieve tax and entitlement reform to solve our looming debt crisis and create more American jobs,” said Michael Steel, a spokesman for Boehner. “We’re still waiting for the White House to identify what spending cuts the president is willing to make as part of the balanced approach he promised the American people.”

Earlier, Jay Carney, Obama’s chief spokesman, refused to provide details about what negotiators were discussing.

“I don’t think it is helpful to give hourly or daily readouts” of the conversations, Carney said. He declined to comment on “speculation about what was said and spin about what it means.”

Carney said Obama provided specific cuts in a September 2011 proposal to a congressional supercommittee considering plans to reduce the deficit and in the budget he presented to Congress earlier this year.

“There’s a lot of specificity in there,” Carney told reporters at his daily briefing. “We have not seen anything like that kind of specificity from Republicans.”

Talking to ABC, Obama did not reject a Republican call to raise the age of Medicare eligibility from 65 to 67, a proposal that many Democrats strongly oppose.

The proposal is “something that’s been floated,” Obama said, not mentioning that he had tacitly agreed to it in deficit-reduction talks with Boehner more than a year ago that ended in failure.

“When you look at the evidence, it’s not clear that it actually saves a lot of money,” he said. “But what I’ve said is, let’s look at every avenue, because what is true is we need to strengthen Social Security, we need to strengthen Medicare for future generations, the current path is not sustainable because we’ve got an aging population, and healthcare costs are shooting up so quickly.”

Also Tuesday, Senate Majority Leader Harry Reid said Congress still has time to enact a plan before Christmas, although it won’t be easy.

“I think it’s going to be extremely difficult to get it done before Christmas, but it could be done,” Reid, a Nevada Democrat, told reporters.

Reid spoke a few hours after Boehner reiterated his call for Obama to offer proposed spending cuts as part of a deficit-reduction package.

“Where are the president’s spending cuts?” Boehner, an Ohio Republican, said on the House floor.

He said he is still “hopeful” the parties can reach a budget agreement before the end of the year.

“The longer the White House slow-walks this process, the closer” the economy gets to the fiscal cliff, the speaker said in his first public comments since meeting with Obama on Sunday.

“Right now the American people have to be scratching their heads and wondering: When is the president going to get serious?” Boehner said.

In response to Boehner, House Minority Leader Nancy Pelosi pointed to more than $1 trillion of cuts already passed, including those in the 2011 law that raised the debt limit.

“Where are the cuts?” said Pelosi, a California Democrat. “They’re in bills, Mr. Speaker, that you’ve voted for.”

She called on Republicans to permit a vote on Obama’s plan to let tax cuts expire for people in upper incomes, while keeping them in place for the middle class.

Asked Tuesday about prospects for a budget deal, House Republican Whip Kevin Mc-Carthy of California told reporters that Obama “changes what he asks for so I get less confident.”

Talks remain deadlocked because administration negotiators have taken much different positions than what Obama outlined to Boehner on how much revenue to raise and the amounts of spending cuts, said congressional aides who weren’t authorized to discuss the negotiations publicly.

The perception of the state of the talks is different in the Senate. A Senate Democratic aide disputed the notion that talks had broken down over Obama’s negotiators taking different positions, saying that the issue remained Republicans’ refusal to budge on tax rates.

If Congress doesn’t act, tax rates for incomes at all levels would rise, along with taxes on estates, capital gains and dividends.

The Congressional Budget Office has said if nothing changes, the stalemate probably would lead to a recession in the first half of 2013. Obama and Boehner are trying to replace the immediate deficit reduction with more gradual tax and spending changes.

More than 150 chief executive officers, including JPMorgan Chase’s Jamie Dimon and Goldman Sachs’ Lloyd Blankfein, called on Obama and Boehner to compromise on a budget deal that would include new tax revenue and spending cuts.

Without a “principled compromise” soon, the chief executives warned in a letter Tuesday, the U.S. will suffer “long-lasting, if not permanent,” economic damage.

“Compromise will require Congress to agree on more revenue — whether by increasing rates, eliminating deductions or some combination thereof — and the administration to agree to larger, meaningful structural and benefit entitlement reforms and spending reductions that are a fiscally responsible multiple of increased revenues,” said the CEOs, all members of the Business Roundtable, a Washington-based association.

While private talks continue between the administration and aides to Boehner, each side has been insisting publicly that the other must give in first.

“We’re basically running out of time,” said Senate Minority Leader Mitch McConnell, a Kentucky Republican. “We’re going to find out whether the president actually agrees with us on cutting any government spending whatsoever.”

Meanwhile, billionaire investors Warren Buffett and George Soros are calling on Congress to increase the estate tax as lawmakers near a decision on tax policies.

In a joint statement Tuesday, Buffett, Soros and more than 20 other wealthy individuals asked Congress to lower the estate tax’s per-person exemption to $2 million from $5.12 million and raise the top rate to more than 45 percent from 35 percent.

An estate tax structured this way will “raise significant revenue to reduce the deficit and fund vital services, will only be paid by the top one percent of estates, will raise more from the wealthiest estates” and will simplify compliance, said the statement. It also was signed by John Bogle, founder of mutual fund company Vanguard Group, and former President Jimmy Carter.

The renewed push for increasing the estate tax faces significant opposition in Congress, where Senate Democrats including Max Baucus of Montana and Mark Pryor of Arkansas have joined Republicans to support the current estate tax parameters.

That intra-party dispute caused Democrats to leave estate tax changes out of legislation they passed July 25 extending income tax cuts.

Information for this article was contributed by Julianna Goldman, Roger Runningen, Derek Wallbank, Richard Rubin, Kathleen Hunter and Noah Buhayar of Bloomberg News; and by David Espo, Ben Feller, Jim Kuhnhenn and Donna Cassata of The Associated Press.

Front Section, Pages 1 on 12/12/2012