Mon, Dec 17, 2012 - Page 15 News List

White House declines tax offer: source

SIGNIFICANT SHIFT:The new offer made by US House Speaker John Boehner is a serious shift in the Republican insistence that low tax rates be extended for all taxpayers

Reuters, WASHINGTON

US President Barack Obama is not ready to accept a new offer from the Republican leader of the US House of Representatives to raise taxes on top earners in exchange for major cuts in entitlement programs, a source said late on Saturday.

The shape and details of Boehner’s offer were uncertain on Saturday night, as was the exact reason the president was prepared to reject it.

The source said the White House sees the offer made on Friday by US House Speaker John Boehner as a sign of progress, but simply believes it is not enough and there is much more to be worked out before Obama can reciprocate.

Tax rates and entitlements are the two most difficult issues in the so-far unproductive negotiations to avert the “fiscal cliff” of steep tax hikes and spending cuts set for the new year unless Congress and the president reach a deal to avoid them.

The Boehner offer is the first significant sign of a shift in the Republican insistence that low tax rates set to expire on Dec. 31 be extended for all taxpayers, and comes at some risk to the speaker.

Conservatives, particularly Tea Party-supported Republicans, see opposition to tax increases for anyone as an abandonment of party principles, and of the Republican base.

Obama wants high earners — those earning roughly US$250,000 a year or more — to pay higher taxes in order to put the burden of deficit reduction on those he says can best afford it.

Republicans have privately spoken of coming back at Obama with a threshold of US$1 million. Obama has previously called that unacceptable because it would not raise enough money on its own to cut the deficit significantly or provide enough money to avert across-the-board spending cuts.

On entitlements, the president faces pressures of his own from Democrats, who see protecting Medicare, the government health insurance program for seniors, as a bedrock principle.

A major bloc of congressional Democrats has already signaled they will not accept major cutbacks in Medicare as part of any deal.

It was unclear on Saturday if the president had communicated his response to Boehner.

Boehner’s shift did not come as a complete surprise. Recent polls have suggested little public support for his position and he has been getting pressure from Senate Republicans to be more flexible.

The massacre in Connecticut silenced fiscal cliff talk in public on Saturday as the both sides got ready for a final scramble, with sessions of the House now scheduled just days before Christmas.

The moratorium on cliff pronouncements masked a growing recognition the two sides could remain deadlocked at the end of the year on the key sticking points — taxes and entitlements.

Senate Republicans prodded their counterparts in the House to beat a retreat on tax hikes, in a fashion that would allow Obama’s proposal to pass the Republican-controlled House while allowing Republicans to cast a face-saving vote against it.

Republicans could then shift the debate onto territory they consider more favorable to them, cutting government spending to reduce the deficit.

“Just about everyone is throwing stuff on the wall to see if anything sticks,” one Republican aide said in reference to various proposals being discussed on how to proceed.

Alluding to public opinion polls, the aide added: “We know if there is no deal, we will get blamed.”

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