White House Rejects GOP's Counteroffer

House Republicans are billing it as a "bold counteroffer." The proposal includes a combination of revenue raising and spending cuts. What it doesn't include is any rise in tax rates.

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RENEE MONTAGNE, HOST:

Let's talk about that new offer now. The proposal from House Republicans includes a combination of revenue raising and spending cuts. What it doesn't include is any rise in tax rates.

To help us dig into this offer and what it means for the state of negotiations, we're joined by NPR congressional reporter Tamara Keith.

Good morning.

TAMARA KEITH, BYLINE: Good morning, Renee.

MONTAGNE: House Republicans are billing this as a bold counter-offer. Why are they calling it bold?

KEITH: Well, because senior GOP aides say this offer is a compromise. As one aide put it, this isn't something conservatives are going to be jumping up and down endorsing. And they contrast that to the offer that Treasury Security Timothy Geithner brought to Capitol Hill last week. As you remember, last week he came and offered what was essentially the president's budget from earlier this year. It was a wish list. And Speaker Boehner and his Republican colleagues have been alternating between calling it laughable and not serious. So now it was Speaker Boehner's turn to make an offer. And he says he could have easily sent over the House GOP budget, but he didn't.

REPRESENTATIVE JOHN BOEHNER: We could have responded in kind, but decided not to do that.

KEITH: So this takes away the Democratic talking point that Republicans hadn't made any concrete demands. And it at least offers a rough outline of a deal that Republicans would be willing to accept.

MONTAGNE: Well, let's get to some specifics, starting with taxes.

KEITH: Taxes. House Republicans are offering $800 billion in new revenue. So that's about half of what the president asked for. They say this can come through pro-growth tax reform that closes special interest loopholes and deductions. And this is the significant part - they say that can all happen while lowering tax rates. The White House firmly believes that you actually can't get enough revenue without raising rates or hurting the middle class. The president campaigned on the idea of raising rates on people who earn over $250,000 a year. He feels he has a mandate to raise rates on the wealthy, and he is sticking to that.

MONTAGNE: Of course one man's special interest is another's mortgage interest deduction or charitable donation. So does the Republican proposal list any specifics about which loopholes and deductions would be affected?

KEITH: No, it's doesn't. This proposal is really, they say, a broad framework that would have be fleshed out by the various congressional committees, presumably sometime next year after the crisis is averted. But, you know, when you look at this idea of closing loopholes and lowering rates, it's been around for a long time. It was in the House Republican budget. It's something that Mitt Romney also talked about on the campaign trail. And so far in this conversation, every time it comes back to, well, where is it going to come from - and the answer is always, well, the tax committees are going to have to figure this out later. And that's simply because of what you said - talking about these loopholes and deductions, they're popular. And people don't want to be pinned down on them too soon.

MONTAGNE: And the House Republican framework also includes savings from Medicare and Social Security, which are pretty touchy as well. Can you walk us through those?

KEITH: Yeah, no. There aren't a lot of specifics here either. But a GOP aide indicated that means testing and also raising the eligibility age to 67 for Medicare would probably be necessary to get the kind of savings that they're talking about. On Social Security, they want to change the way the cost-of-living adjustments are calculated. And that alone would save $200 billion over a decade. But that is another major sticking point here, because congressional Democrats have insisted that Social Security be kept out of these discussions.

MONTAGNE: So does this get Congress and the president any closer to avoiding the fiscal cliff?

KEITH: You know, it's hard to say. One sign of progress here is that in the past Republicans have insisted that any new revenue come through economic growth rather than actually raising taxes on people. And this offer acknowledges that some people would be paying higher taxes. In fact, they say the wealthy would be paying higher taxes. But you know, it keeps coming back to this tax rate issue. The president has drawn a line and this offer doesn't show House Republicans any closer to supporting tax rate increases on the wealthy.

MONTAGNE: Tamara, thanks very much.

KEITH: Thank you.

MONTAGNE: That's NPR congressional reporter Tamara Keith.

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