Today Republicans offered a counterproposal in the ongoing debate over the “Fiscal Cliff.” The proposal put forward the most recent House-passed Budget resolution, commonly called the Ryan plan, as their starting point, in response to what the President offered. The plan calls for modifications to Medicare which would eventually bring expenditures to a steady 4.75% of the economy. It also included Medicaid provisions which would save the federal government nearly $800 billion over 10 years. Alterations to Federal employee compensation and the Supplemental Nutrition Assistance Program were also included as spending cuts.
The document also suggested that the Bowles recommendations might be a source of common ground, which included $800 billion in new revenue, not through higher tax rates but through tax reform that closes loopholes and deductions. The Bowles recommended $900 billion in mandatory spending cuts and $300 billion in discretionary spending cuts. This indicates what compromises Republicans are willing to make in order to reach an agreement.
The counterproposal rejected Obama’s original proposal which called for $1.6 trillion in new tax revenue and additional $50 billion in stimulus spending for 2013. In whole the plan requests $200 billion in new stimulus spending.
The proposal also called for removing the requirement that the two chambers of Congress vote to increase the debt ceiling. The power would move to the President with Congress having to vote to block an increase. It would then require a 2/3 vote in both chambers to override a veto on such a block. This has been seen as a non-starter for many Republicans, who view it as a power grab.
Obama’s plan also include the expiration of the top Bush-era income-tax rates, $350 billion in cuts over 10 years from health-care entitlement programs and $250 billion in cuts to other mandatory programs over 10 years. This totals $600 billion in mandatory spending cuts over 10 years compared to the $900 billion in the Bowles recommendation.
Podcast - The Fiscal Cliff - The Adam Goldfein Show - Hour1
Podcast - The Fiscal Cliff - The Adam Goldfein Show - Hour2
Additional Resources
GOP Letter to President on Budget Talks: http://online.wsj.com/public/resources/documents/boehner_letter_to_wh_121203.pdf
Wall Street Journal Obama’s Fiscal Cliff Offer: http://blogs.wsj.com/washwire/2012/12/01/obamas-fiscal-cliff-offer-more-details/?KEYWORDS=obama%27s+fiscal+cliff+proposal
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