Yesterday House Republicans countered President Obama’s budget proposal with a $2.2 trillion deficit cutting plan that makes deep spending cuts but falls short of accepting new tax rate increases on the wealthiest 2% of Americans.
“This is another attempt to jump start substantive, good-faith negotiations toward a bipartisan solution that can be enacted soon, a stark contrast to the unserious proposal the White House put forward last week,” House Speaker John Boehner said in a statement during the proposal’s release on Monday.
The Republican proposal reveals deep philosophical differences from President Barack Obama’s budget proposal unveiled last week and requests $800 billion in tax revenue over 10 years.
It raises tax revenue by $800 billion through an ambitious overhaul of the complicated and labyrinth like U.S. tax code that is expected to take a significant amount of time to reform.
Republicans said they would oppose raising tax rates on the wealthiest 2 percent of U.S. households, which is a staple of President Obama’s budget proposal.
In a letter sent to President Obama that was signed be several Republican lawmakers in Congress , House Speaker John Boehner (R-Ohio) outlined an earlier plan by former President Bill Clinton’s chief of staff Erskine Bowles which was presented in 2011 to Congress’ Joint Select Committee on Deficit Reduction.
“Notably, the new revenues in the Bowles Plan would not be achieved through higher tax rates which we continue to oppose and will not agree to in order to protect small business and our economy. Instead, new revenue would be generated through pro-growth tax reform that closes special interest loopholes and deductions while lowering rates,” Boehner states.
It is still unclear which special interest loopholes and deductions would be closed since they were not identified.
Democrats wasted little time criticizing the new Republican budget proposal.
“The Republican letter released today does not meet the test of balance,” White House communications director Dan Pfeiffer said on Monday. “Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close, or which Medicare savings they would achieve.”
The Republican budget proposal reduces the expansion in Social Security cost of living payments, lowers entitlement program costs by at least $900 billion, increases the Medicare eligibility age, and cuts $300 billion in discretionary spending.
It also lowers government healthcare costs by $600 billion over a decade, slows the expansion of cost of living increases on federal benefits by $200 billion by revising the way they are calculated, and slashes government spending by $600 billion ($300 billion by forcing federal workers to contribute more toward their pensions and $300 billion from the Pentagon budget and domestic programs).
White House Budget Proposal
President Obama revealed his own budget proposal last week, consisting of a new budget plan worth $1.6 trillion in higher taxes over 10 years. The proposal includes a possible extension of the temporary Social Security payroll tax cut and expanded presidential powers to raise the national debt limit.
The White House budget proposal includes spending cuts worth $600 billion ($350 billion from Medicare) and reductions in other health care programs along with $200 billion in new stimulus spending.
The White House proposal was criticized by Republicans who reject any effort to end tax cuts for the wealthiest 2% of Americans and seek deeper spending cuts with entitlement spending in health care programs such as Medicare and Social Security which Democrats have been reluctant to cut any further.