The House GOP's fiscal-cliff counteroffer: Inching toward a deal?

The White House isn't impressed with the GOP's opening gambit, but this game of fiscal chess has finally started in earnest

John Boehner (R-Ohio) leaves after a news conference on Nov. 30 on Capitol Hill.
(Image credit: Alex Wong/Getty Images)

The Republicans have made a counteroffer in the fiscal-cliff negotiations, and if a good plan can be measured by how unpopular it is with factions on either side of him, House Speaker John Boehner (R-Ohio) has a great success on his hands. The White House dismissed the proposal, saying the GOP's opening bid fails "the test of balance" since, among other things, it "actually promises to lower rates for the wealthy"; the conservative group Heritage Action accused Boehner of asking Republicans to break their no-tax pledge by putting $800 million in new revenue on the table, notes Politico, and RedState prominently displayed the headline "The Boehner Fiscal Offer" under a waving white flag of surrender.

What's in this offer? In a signed letter to President Obama, Boehner and the rest of the House GOP leadership propose reducing Medicare and Medicaid expenditures by $600 billion over 10 years, slicing $200 billion from Social Security and other federal programs by slowing annual benefit increases, reducing farm subsidies and other mandatory spending by $300 billion, and cutting another $300 billion in discretionary spending. In return, they offer $800 billion in new revenue "generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates." Boehner says this "imperfect, but fair, middle ground" offer is based on a proposal that Democrat Erskine Bowles pitched to the congressional "super committee" a year ago. Bowles, it should be noted, disavowed ownership, saying his back-of-the-envelope numbers were the midpoint of where the parties were in 2011, but that "circumstances have changed since then," as has the "middle ground."

Well, "Obama can no longer accuse House Republicans of failing to present a plan for reducing the deficit," says Jonathan Cohn at The New Republic. That's "progress, of a sort." But Boehner's plan is terrible, merely committing to paper "a few ideas Republicans have been floating for the last few weeks," with their "usual level of specificity — which is to say, very little specificity at all." On the upside, both sides now have "official positions for which they can be held accountable," but if the options for the Democrats are to drive off the fiscal cliff or agree to big, damaging cuts in Medicare and Social Security for "a modest amount of revenue" from undisclosed tax rejiggering, pulling a Thelma and Louise looks pretty attractive.

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Plus, the GOP math doesn't really add up, says Matthew Yglesias at Slate. It's hard to get Boehner's new revenue without raising tax rates. "You could raise almost $800 billion by capping deductions at $50,000 a year, and the vast majority of that money would come from rich people," but Obama wants the middle class spared any tax hikes. And that number becomes basically impossible if you cut tax rates for the wealthy. The time for such vagueness is past, says Jared Bernstein at On the Economy. Failing to provide workable numbers "didn't work for Romney in the campaign, when you'd expect such vagueness. With the cliff a few weeks away, it's useless."

No, it's "brilliant," says Grace Wyler at Business Insider. Specific numbers can be hashed out in negotiations, but what Boehner is doing is putting down his stake "as a compromiser, expressly disavowing the more conservative approach that his party took before the election," while painting Obama as unreasonable. It's "a savvy tactical maneuver," and my bet is that the White House agrees to his terms as long as tax rates for the rich go up. Still, that would mean that, once again, Republicans "dictate the terms of the talks."

Besides, $800 billion through tax reform is certainly "in the ballpark of doable," even by White House estimates, says Erika Johnsen at Hot Air. Boehner has laid out "a mature, serious plan that has something for everybody." And Republicans should get some credit for not only producing a more politically viable proposal than Obama's laughable $1.6 trillion in tax hikes but also for agreeing to new tax revenue. That's "a huge concession in and of itself that Democrats have hardly deigned to notice."

It would have been a huge concession in 2011, when Republicans held all the cards and Obama was "chasing after Boehner with compromise proposals," says Ezra Klein at The Washington Post. "But elections have consequences, and the consequence of this election is that those offers are no longer on the table." To use a golfing term, "Boehner is trying to call a mulligan." He won't get one.

Instead, we are likely to see a slow process of Bowles-style, split-the-difference compromise. Boehner is now at $800 billion in revenues, and the White House is at $1.6 trillion. If the two sides end at $1.2 trillion, that would be about what most in Washington are expecting. Similarly, Boehner is at $900 billion in mandatory spending cuts, and Obama is at $600 billion. If the two sides end at $750 billion, that wouldn't be such a surprise. One sticking point will be how to get those revenues. Obama has said he won't sign any proposal that leaves tax rates where they are today. Boehner says Republicans "won't agree to" any proposal that raises tax rates.... It's too early to say how those questions will be resolved. But they won't be resolved by returning to the Bowles framework from 2011. Unfortunately for the Republicans, there are no mulligans in politics.

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