Counter Proposal Offered By Obama Ahead Of Fiscal Cliff Deadline

Counter Proposal Offered By Obama Ahead Of Fiscal Cliff Deadline

In an effort to reach a “fiscal cliff” agreement with House Speaker John Boehner, President Barack Obama changed the household earnings limit for higher taxes to $400,000 from $250,000 last Monday. He also adopted the proposal for smaller increases in Social Security cost-of-living.

Although the counter-proposal narrowed the gap between the two sides, aides of Boehner indicated that a deal that will avoid a fiscal cliff was not yet in sight.

Despite the pronouncements by a spokesman of the speaker, there are indications that a deal may be finalized before the fiscal cliff deadline. Discussions between the two sides started to pick up following the agreement of Boehner to higher income taxes for households that earn at least $1 million. The speaker also conceded to increasing the debt ceiling.

Boehner indicated that tax revenue for a ten-year period would reach $1 trillion although Obama wanted around $1.2 trillion in additional revenue. New revenues will be raised for 2013 via a tax overhaul that will remove a number of tax deductions and loopholes in the system. The speaker offered to forego increases in the debt ceiling for one year but the president wanted a two-year suspension.

The president also refused to increase the Medicare eligibility age, which Boehner had proposed. Although the president made some concessions in a number of federal benefits, he is trying to protect Medicare, which is one of the contentious issues in the negotiations to avoid a fiscal cliff.

Some of the elements in the counter-proposal of the president included an extension on unemployment insurance benefits, $50 billion for infrastructure expenses in the coming year that will increase in the next few years, and a $200 billion domestic discretionary that will be used for defense and non-defense purposes.

Regardless of the differences, there are indications that the agreement to head off a fiscal cliff may be reached as early as this week.

Posted by James Fried on Wednesday December 19 2012, 5:30 AM EST. Ref: CBS News. Link. All trademarks acknowledged. Filed under Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0