White House Makes New Offer in Talks to Avoid Fiscal Cliff

VIDEO: A new offer from the White House prompts talk that a deal is within reach.

WASHINGTON - They are getting closer.

The White House presented a new offer to Speaker of the House John Boehner today that makes some important concessions in the talks to work out a deal to avoid the so-called fiscal cliff, a mixture of tax rate hikes and spending cuts that go into effect in January of a deficit reduction agreement is not reached. This White House package comes in response to the offer Boehner made to allow tax rates rise on those making $1 million.

The new offer from the White House includes fewer tax increases and more limits on the entitlement spending (including limits on cost of living adjustments for Social Security recipients) than the President's previous offers.

Speaker of the House John Boehner will present this latest White House offer to House Republicans tomorrow morning. Here are some of the key concessions:

  • Instead of $1.6 trillion tax increases, the White House is now offering $1.2 trillion
  • The Bush tax cuts would be extended for everybody earning under $400,000 (the previous White House offer was $250,000)
  • The formula used to calculate cost of living increases will be adjusted, resulting in lower annual increases for Social Security recipients (liberals will hate this). The neediest seniors, however, will still see their cost of living increases adjusted according to the old formula.
  • All-told, the offer includes 1.22 trillion in spending cuts.
  • A two year extension of the debt ceiling (the President had been asking for a permanent extension).

The reaction from the speaker of the House to this offer is quite a contrast to his reactions to previous White House offers.

Instead of denouncing it as not being serious, Boehner spokesman Michael Steel calls the offer "a step in the right direction" but still not "balanced." He also sees the numbers a little differently.

"Any movement away from the unrealistic offers the president has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced," Steel said. "We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem."

In other words, this won't be the deal, but it is considerably closer than where we were last week.

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