John Boehner's Two-Part Counteroffer on the "Fiscal Cliff"

A blog about business and economics.
Dec. 3 2012 3:25 PM

John Boehner's Two-Part Counteroffer on the "Fiscal Cliff"

John Boehner is out with his counteroffer to Obama's opening bid on the so-called fiscal cliff, and it's a bit of a confusing document. He leads with a bunch of stuff about the Ryan budget that the House already passed and the various reforms that "are, in our view, absolutely essential to addressing the true drivers of our debt," but that's actually not Boehner's proposal. After rehearsing the case for the Ryan budget, he offers a different plan based on what he says Erskine Bowles has proposed.

The plan is:

— $800 billion "through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates."
— $900 billion in mandatory spending cuts that don't necessarily involve huge structural reforms.
— $300 billion in discretionary spending cuts over and above what was enacted in the Budget Control Act.
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Basically Boehner is looking to put a proposal on the table that's less far-reaching than the Ryan budget without backing off the House GOP's support for said budget. Now a huge problem here is, as ever, on the tax side. You could raise almost $800 billion by capping deductions at $50,000 a year, and the vast majority of that money would come from rich people, but it would be inconsistent with Obama's pledge to raise money exclusively from rich people. But that doesn't include lowering rates. The way Simpson-Bowles managed to get to rate-lowering, revenue-raising tax policy was by first assuming the expiration of the Bush tax cuts for the rich and then doing base-broadening reform.

I'd be very interested to see what kind of proposal Boehner has in mind that would meet his criteria.

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