In their talks, Obama has proposed raising taxes by $1.2 trillion over the coming decade by boosting the current top 35 percent rate to 39.6 percent for income over $400,000, plus other increases on the highest-earning Americans.
He also says he’s offered about $1.2 trillion in spending cuts over 10 years, including slowing the growth of benefits from Social Security and other programs. His proposed spending cuts also include $400 billion in savings from Medicare and Medicaid, the health care programs for the elderly and poor whose defense Democrats consider precious priorities.
Boehner has offered about $1 trillion in tax increases and roughly the same amount in spending savings. An earlier Boehner offer included $600 billion in Medicare and Medicaid savings — well more than Obama — but it’s unclear whether the speaker is still seeking that figure.
Because of a dispute over how some savings are classified, Boehner says Obama’s offer is really $1.3 trillion in higher taxes and only about $850 billion in spending cuts.
The House speaker says Obama’s offer is not balanced because its new taxes and spending cuts are unequal. And he complains it does too little to control fast-growing benefit programs like Medicare, a chief driver of the federal government’s mushrooming deficits.
Yet while their offers are relatively close, another obstacle they face is that even slight changes in the numbers could force politically significant policy alterations.
Adding, say, another $100 billion to the tax increase over 10 years could mean that people with incomes well below $1 million a year would get a tax increase, something Boehner wants to limit.
On the other hand, adding $100 billion more in spending cuts could mean a deeper hit than Obama wants to Medicare. The president prefers to limit Medicare cuts to the reimbursements that doctors and other health care providers receive, but ever deeper cuts could mean more doctors would be likely to stop treating Medicare patients — an outcome Democrats don’t want.
Associated Press writer Andrew Taylor contributed to this report.