GOP offers own proposal to avert 'fiscal cliff'

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U.S. Speaker of the House Rep. John Boehner speaks during a news conference on Capitol Hill in Washington, D.C., Nov. 30, 2012.

By Luke Russert and Michael O’Brien, NBC News

Updated 3:25 p.m. ET -- Republicans offered up their own proposal to avert the impending “fiscal cliff” on Monday amid Democratic demands that the GOP match the Obama administration’s plan with one of their own.
In a letter to President Barack Obama, House Republican leaders outlined the contours of a deal they said would achieve a net savings of $2.2 trillion. The plan, which is based on fiscal commission Democratic co-chairman Erskine Bowles’s proposal to the super committee, would achieve these savings through revenue from tax reforms, health savings and discretionary spending cuts.

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"Going over the cliff will hurt our economy and hurt job creation in our country. It’s one of the reasons the day after the election I offered a concession to try and speed this process up. Unfortunately, the White House responded with their ‘La-La-Land’ offer that couldn't pass the House or Senate and was basically the president’s budget from last February," House Speaker John Boehner told reporters on Capitol Hill at a briefing detailing the plan.

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Speaker John Boehner speaks during a news conference, Nov. 30, 2012, on Capitol Hill.

"We could have responded in kind, but we decided not to do that. What we’re putting forth is a credible plan that deserves serious consideration by the White House and I would hope that they would respond in a timely and responsible way," the Ohio Republican added.

The counter-offer coincides with Democratic demands that Republicans produce their own proposal to match the deal offered last week by the administration. That plan, presented to Republicans by Treasury Secretary Tim Geithner, called for $1.6 trillion in new revenues, savings from entitlement programs and new spending on unemployment insurance and investment projects. GOP leaders rejected the plan out-of-hand.

Still, the GOP proposal on Monday appears to move no further toward compromise on Obama’s central demand that tax rates be allowed to increase on the wealthiest Americans. While Republicans have agreed in principle that richer Americans can shoulder a greater share of the tax burden, they insist this must be achieved through ending loopholes and deductions, rather than raising rates.

The Republican plan, which is also backed by Senate Minority Leader Mitch McConnell, R-Ky., achieves its $2.2 trillion in several steps.

rep. Sander Levin, D-Mich., talks about the key points in President Barack Obama's fiscal cliff negotiation that are making Republicans wary.

As Republicans put it, they would raise $800 billion in new revenue through tax reform, $600 billion in health savings, $200 billion from changes to the Consumer Price Index, $300 billion in discretionary spending cuts, and another $300 billion in savings in mandatory spending. Many of the health savings track closely with the changes to Medicare first proposed in Wisconsin Rep. Paul Ryan’s budgets.

Republicans say the plan, using the Obama administration’s math, would achieve $4.6 trillion in savings.
It’s unclear, though, whether the Republican plan would move toward ending the stalemate around the fiscal cliff negotiations, with less than a month remaining until the automatic tax hikes and spending cuts are scheduled to snap into place on Jan. 1.

Senate Majority Leader Harry Reid, D-Nev., pummeled his GOP colleagues earlier Monday afternoon, arguing that their failure to produce a counter-offer would only exacerbate the situation.

The new GOP plan reflects the posturing that has come to characterize these negotiations, separated just a month from an election which awarded Obama a second term and which kept Republicans in control of the House and Democrats in control of the Senate.

The White House had no immediate reaction to the proposal on Monday afternoon, though the president continued his messaging offensive on Monday with a glossy campaign-style video highlighting the cost to families if the 2001 Bush-era tax cuts were allowed to expire at the end of this month. (Obama has argued they should be extended for all but the wealthiest 2 percent of U.S. households.)

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Treasury Secretary Timothy Geithner arrives at Capitol Building before a meeting with House Minority Leader Nancy Pelosi in Washington, D.C., Nov. 29, 2012.

The president also took to Twitter to make the case for his own plan, answering questioners who used the informal 140-character medium to ask about the fiscal cliff negotiations.

Asked by one participant why he insists on increasing rates on the top 2 percent of earners rather than limiting deductions in order to raise revenues, the president replied that capping deductions alone would not raise adequate revenue.

"Not enough revenue, unless you end charitable deductions, etc. [L]ess revenue=more cuts in education," he wrote.

The president also dismissed the GOP notion that lower taxes for the very wealthy have a trickle-down effect in terms of new hires and a larger tax pool. "High end tax cuts do least for economic growth & cost almost $1T," he wrote. "Extending middle class cuts boosts consumer demand & growth"
Obama also argued that his administration cut spending by $1 trillion last year and that he is open to further "smart cuts" as long as they don't affect education or job growth.