White House Rejects Boehner's Lame Offer

House Speaker John Boehner sent President Obama a Counter-Offer for keeping the nation from going over the Fiscal Cliff - Slope - Curb - whatever. Needless to say it was lame and reminiscent of Romney's vague budget in which he wouldn't explain which tax deductions he would cut to balance the budget.

Therefore, Boehner's plan was a big fat zero, and the White House immediately rejected it with almost a yawn - nothing to see here.

PDF: Boehner and GOP Counter-Offer on Fiscal Cliff

Talking Points Memo: White House Rejection Letter

“The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill. 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.

Independent analysts who have looked at plans like this one have concluded that middle class taxes will have to go up to pay for lower rates for millionaires and billionaires.

While the President is willing to compromise to get a significant, balanced deal and believes that compromise is readily available to Congress, he is not willing to compromise on the principles of fairness and balance that include asking the wealthiest to pay higher rates. President Obama believes – and the American people agree – that the economy works best when it is grown from the middle out, not from the top down. Until the Republicans in Congress are willing to get serious about asking the wealthiest to pay slightly higher tax rates, we won’t be able to achieve a significant, balanced approach to reduce our deficit our nation needs.”

To that, Boehner Then Replied, also via TPM:

“Republicans have once again offered a responsible, balanced plan to avoid the fiscal cliff, and the White House has once again demonstrated how unreasonable it has become," Boehner's spokesman Brendan Buck said in a statement emailed to TPM. "If the President is rejecting this middle ground offer, it is now his obligation to present a plan that can pass both chambers of Congress."

So the drama will continue . . .

LA Times Story

Rejecting President Obama’s call to raise tax rates for the wealthy, House Republicans unveiled a counteroffer that would cut Medicare, Medicaid, Social Security and other federal programs while raising new revenue by overhauling the tax code.

House Speaker John A. Boehner (R-Ohio) and his GOP leadership team sent the White House the three-page offer Monday afternoon as the administration turned up the volume on their complaints that Republicans have been unwilling to put a serious proposal on the table.

. . . Obama has been fighting to preserve the lower tax rates for all but the wealthiest households, those earning more than $250,000 for couples and $200,000 for singles. The president has said the nation can no longer afford tax breaks for the wealthy that would cost about $900 billion over the decade. But Republicans are fighting to keep the tax breaks for all.

Monday, Republicans proposed capturing nearly the same amount of revenue by closing loopholes and limiting itemized deductions on the wealthiest households, while also launching a broader tax-reform process that would lower all tax rates.

Boehner and his team also proposed $1.4 trillion in savings from spending cuts — including healthcare reforms that could include raising the Medicare retirement age and asking wealthier seniors to pay higher Medicare premiums. They also proposed limiting the cost-of-living adjustments for Social Security recipients and others.

Going Down the "Fiscal Slope" in January

What is the Fiscal Cliff?  Or is it more of a Gentle Slope?

Source: San Francisco Chronicle

The term refers to the tax cuts that would expire and the automatic spending cuts that would take effect if Congress fails to act by year's end.

Why the deadline? Congress created it to compel action if a so-called supercommittee failed to find common ground on deficit reduction. It failed.

Tax increases: Expiration of the Bush-era tax cuts, along with a scheduled increase in the payroll tax, would raise taxes on all Americans by several percentage points.

Spending cuts: Federal spending would be trimmed by $1.5 trillion over the next decade. The few exempted areas include Social Security, Medicaid, military pay and veterans benefits.

Unemployment: About 2 million Americans will lose jobless benefits if the extended safety net program expires on Dec. 29.

Source: The Economist

What has Obama offered the Republicans so far? 
He sent Tim Geitner to Capitol Hill with this plan:

From Huff Post

Geithner's offer would delay the sequester -- automatic spending cuts to the Pentagon and social programs -- for a year, and effectively eliminates the congressional requirement to lift the debt ceiling in perpetuity. The offer included an extension of unemployment insurance, the payroll tax and even money to help homeowners modify mortgages and invest in infrastructure. "I think there was a leprechaun in there somewhere, too," quipped one GOP aide.
The proposal is based on a two-step plan that would decouple the high-end tax and capital gains rates from the middle-class rates, extending only those for the middle class. It would revert estate taxes to their higher 2009 level, and raise an additional $600 billion in taxes elsewhere, according to the GOP summary. It then proposes tax reform required to raise at least as much as the tax hikes, and entitlement reform that would trim $400 billion from the programs.

Are Republicans really going to reject all offers to deal with Obama?
Will they remain loyal to the Tea Party and Grover Norquist?
Most sources behind the scenes say the smart people among them know taxes have to go up and they have to deal. Speaker Boehner seems to be holding to the Tea Party talking points, but interestingly his back-up team are getting the word out, so we can assume he is probably posturing for the camera.

Oklahoma Senator Tom Cole on NPR's All Things Considered:

SIEGEL: . . . a surprise from one of the top Republicans in the House. He broke ranks with his GOP colleagues. While they are holding out for an extension of all Bush-era tax cuts, Oklahoma Republican Tom Cole told members of the leadership team yesterday that they should hurry up and extend tax cuts for the bottom 98 percent of taxpayers.

BLOCK: As for the top 2 percent, Cole argues, Congress can worry about them later. NPR's David Welna caught up with Cole today and has this report.

DAVID WELNA, BYLINE: Oklahoma Republican Tom Cole just got re-elected to a sixth term in the House. He serves there as the GOP majority's deputy whip, and he's a close friend of Speaker John Boehner, which is why a lot of his colleagues were surprised when Politico first reported that Cole urged his colleagues in a closed-door meeting to approve an extension this year of all the expiring tax cuts except those that affect only the top 2 percent.

REPRESENTATIVE THOMAS JEFFERY COLE: We have an opportunity to make sure that the tax rates for 98 percent of the American people don't go up. I think we should do that sooner rather than later.

WELNA: That's Cole this afternoon.

COLE: I'm not trying to persuade anybody. I was asked: In my opinion, what's the best position for us to take? You know, what's in the best interest of the American people? What's in the best interest politically? I think that position that I outlined - that is, making sure that 98 percent of the American people have tax security, so to speak, and then continuing to fight on the other issues, and it doesn't mean giving in to rate increases. I don't believe in that. That's the right thing to do.

Senator John Thune (R-SD) on Fox News via ThinkProgress

MARTHA MAcCALLUM (HOST): What I’m asking you is are Republicans willing to hold the line, to say to the President, I am sorry, we will never agree to a deal that involves an increase in taxes? Are they?

THUNE: I think any deal that passes up here that raises taxes and raises taxes as I mentioned earlier on small businesses, Martha, is not going to enjoy Republican support. Now, there may be enough Republicans who would vote for something like that to pass it in the House of Representatives, they need to get to 218 votes.

MAcCALLUM: Then it would be done, right?

THUNE: We’ll see about that. We don’t know what that. We don’t know what the contours of a final deal might look at this point. Everybody right now is sort of in their corners and doing the posturing.

What happens if Congress does nothing? 
This article has a good explanation of what would probably happen:

Guardian UK

. . . all this discussion about a fiscal cliff is a bit of a misnomer – a cliff suggests a precipitous fall to a likely demise. But in reality, this cliff is more of a slope, or a slow but steady decline, down the road of fiscal austerity. Yes, tax and spending policies will shift after 1 January: taxes will go up and spending cuts mandated by law will begin to go in effect. But these are changes that will unfold over many months, and even years. Indeed, the immediate impact of the "fiscal cliff" will be relatively minor. As the Center for Budget and Policy Priorities noted recently:

"A relatively brief implementation of the tax and spending changes required by current law should cause little short-term damage to the economy as a whole."

This isn't to say that markets won't have a collective freakout or that confidence in Congress to actually do its job will decline further, but those are manageable issues, particularly because, once Washington goes over the cliff, it becomes much easier to quickly reach a deal between Republicans and Democrats.

. . . Let the tax cuts expire on 1 January, with taxes going up on every American. Then, Congress can quickly pass a massive tax cut for those making less than $250,000, retroactive to 1 January. Neither side will want to wait long and force Americans to pay higher taxes, but especially Republicans won't – as they will likely be blamed if no deal is swiftly reached. To do so would mean that all sides are politically satisfied: President Obama can say he stuck to his word about raising taxes on rich Americans, and taxes will have gone up without Republicans having to cast a vote; and both parties can reap the political benefit and claim credit for having cut taxes for the middle class.