US President Barack Obama has softened his demand for higher taxes at upper income levels and agreed to curtail future inflation adjustments for recipients of Social Security pensions, narrowing differences with Republican House of Representatives Speaker John Boehner in talks to avoid a “fiscal cliff,” people familiar with the talks said.
The maneuvering is aimed at reaching an agreement to rein in deficit spending before an automatic year-end hike in taxes for nearly all wage-earners hits, as well as deep spending cuts in defense and in domestic programs across the government.
Speaking a few hours after Obama and Boehner met on Monday at the White House, these people said the president was now seeking higher tax rates beginning at incomes over US$400,000 for couples, down from the US$250,000 level that was a cornerstone of his successful campaign for re-election.
Obama’s willingness to reduce future cost-of-living increases in social security pensions and numerous other government programs marked a clear concession to Boehner, although it came with an asterisk. The president wants lower-income recipients to be exempt from any loss from scaling back future pension cost of living increases, these officials said.
Nor did Obama’s offer include raising the age of Medicare eligibility from 65 to 67, a Republican goal that has drawn particularly strong objections from Democratic liberals who cherish the federal health care program for the elderly.
Several officials also said during the day that Boehner’s offer late last week to accept higher tax rates — a first in the talks — included provisions that would mean higher taxes on investment income and dividends earned by wealthy Americans.
The people who described the talks did so on condition of anonymity, citing the secretive nature of the discussions.
Other major issues are part of the negotiations. Without action by the US Congress, for example, long-term unemployment benefits will expire for millions at the end of the year, and doctors will face a cut in the payments they receive for treating Medicare patients.
Obama has also called for assistance for hard-pressed homeowners, as well as fresh economic stimulus measures, and some Democrats want to include a sizeable amount of disaster aid in any legislation to offset the cost of Hurricane Sandy.
Obama’s latest offer included another concession, dropping his earlier proposal to extend a payroll tax cut due to expire at year’s end.
Brendan Buck, a Boehner spokesman, said that the president’s proposal does not include enough spending cuts and “cannot be considered balanced.”
“We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve out spending problems,” Buck said.
Earlier at the White House, spokesman Jay Carney sidestepped when asked about curbing cost-of-living increases for benefit programs.
“[The president] is prepared to make tough choices. He also understands that his bill will not, as written, likely be what the final compromise, if there is one, looks like,” Carney said.