The fight over the fiscal cliff was getting down and dirty, and the White House had Republicans in retreat by complaining they refused to offer any details of how they would reduce the deficit through tax reform and overhauling costly entitlement programs.
But the Republicans regained some of the high ground on Monday – in a burst of bipartisanship -- by embracing the framework of the president’s own fiscal reform guru, Democrat Erskine Bowles. Along with former Republican senator Alan Simpson, Bowles led a presidential commission to trim the deficit whose recommendations were rejected but have since taken on an almost canonical authority among Washington policy experts.
In a letter to Obama, House Speaker John Boehner, Majority Leader Eric Cantor, House Budget Committee Chairman Paul Ryan and other GOP representatives endorsed a 10-year plan to rein in the $16.2 trillion national debt with $800 billion in new tax revenue, a $600 billion cut in the growth of federal health programs and a more stringent measure of inflation in calculating future Social Security benefits, and $600 billion more in long term savings by trimming government agency spending and other mandatory programs such as farm subsidies.
The letter didn’t address arguably the most contentious issue in the talks – President Obama’s insistence that the wealthiest Americans pay a higher tax rate, a nonstarter with the GOP. Nor did it spell out how Republicans would reform health care programs – although House Republican aides said the GOP leadership would favor raising the Medicare eligibility age from 65 to 67 to save money.
The White House quickly rejected the counteroffer as not balanced. “In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill," said White House communications director Dan Pfeiffer.
THE BOWLES IDENTITY
Yet after a weekend of sputtering over ways to avert a year end calamity of soaring taxes and deep spending cuts that likely would push the economy back into a recession, Boehner and his lieutenants wrapped themselves in the mantle of the Simpson-Bowles approach, which many policy experts and lawmakers view as the gold standard of balanced long term deficit reduction.
“It changes the narrative from not having a plan and criticizing Obama's proposal to engaging in the process of looking for a realistic deal,” said Ron Bonjean, a Washington consultant and former Republican congressional spokesman and adviser. William Galston, a former policy adviser to Democratic President Bill Clinton, described the letter as “a definite step forward.”
“I think the House Republicans were in an untenable position because Boehner was in the position of saying the president’s first bid was absurd and preposterous but not really having anything to counter propose,” said Galston, now a scholar with the Brookings Institution. “Not only are they [now] on higher ground, but I think the negotiations are on a better track than they were before.”
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The new GOP framework parries the plan that Treasury Secretary Timothy Geithner put on the table last week in a private meeting with Boehner, which was essentially a reprise of his most recent Obama budget request. While both would reduce borrowing by more than $4 trillion over the next decade, Obama’s proposal would raise $1.6 trillion in fresh revenue — double the amount in the GOP plan — and produce only about $350 billion in savings from Medicaid and Medicare, the biggest drivers of future borrowing.
Boehner and other GOP leaders angrily rejected the offer out of hand, and said in their letter to the president yesterday that if they had taken the administration offer at face value, they would counter with a House-passed resolution that called for controversial structural changes in Medicare, Medicaid and hundreds of billions of dollars in savings from other mandatory programs, including federal employee compensation and food stamps.
THE PAPER TIGER ROARS
“At the same time, mindful of the status quo election and past exchanges on these questions, we recognize it would be counterproductive to publicly or privately propose entitlement reforms that you and the leaders of your party appear unwilling to support in the near term,” the letter stated.
“With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and Senate, and be signed into law in the next couple of weeks,” the leaders said. They went on to say that Bowles’ testimony last November before the bipartisan super committee on deficit reduction offered “a good middle ground approach that garnered praise from many fiscal watchdogs and nonpartisan experts.”