The Free Press, Mankato, MN

State, national news

December 19, 2012

Obama: He and Boehner are "pretty close" to deal on cliff

(Continued)

WASHINGTON, D.C. —

The backup plan by Boehner would do nothing to head off deep cuts in defense and domestic programs scheduled to begin taking effect in January. And it contains none of the spending reductions that both Obama and Boehner have proposed in their efforts to strike a compromise.

"The speaker is trying to get as much leverage as he can to deal with the president," said Rep. Charles Boustany, R-La., describing the pressure Republicans were hoping it would put on the White House. But he added that he wasn't sure the plan was the best way to get that leverage.

Besides letting tax rates rise only on incomes exceeding $1 million, Boehner's Plan B also would boost the top rate on capital gains and dividends from their current 15 percent to 20 percent for earnings over $1 million, preventing higher increases. It would continue current tax levels on inherited estates — less than Obama wants — and prevent the alternative minimum tax from raising taxes owed by 28 million middle- and upper-class families.

Boehner unveiled his backup plan on Tuesday. He did so even though he and Obama have come tantalizingly close to finding a politically palatable combination of revenue increases and budget savings that could slice around $2 trillion from projected federal deficits over the coming decade.

Both sides say those efforts will continue.

Obama has reduced his demands for tax increases to $1.2 trillion over 10 years, to be imposed on incomes exceeding $400,000 annually. In so doing, the president abandoned his campaign season insistence that he would raise taxes on individuals earning over $200,000 and couples making more than $250,000.

Boehner has boosted his revenue offer to $1 trillion, including raising income tax rates on incomes over $1 million. That is a major concession from the leader of a party that has made opposition to higher rates a fundamental tenet for a quarter century.

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