House Republicans on Monday sent President Obama a $2.2 trillion proposal that would help avert the so-called fiscal cliff largely by rewriting the tax code and reducing spending on Medicare and Medicaid.
Top GOP aides portrayed their plan as a "bold counteroffer" to Obama's initial proposal, which would raise $1.6 trillion in new revenue mainly by raising income tax rates on the wealthiest earners. Republicans dismissed the president's plan as a "joke" when Treasury Secretary Timothy Geithner delivered it to Capitol Hill last week.
Republicans said their plan raises about $500 billion more than the Democratic plan while avoiding the tax rate increase that Obama is demanding and which House Speaker John Boehner, R-Ohio, has flatly rejected.
"What we are putting forward is a credible plan that deserves serious consideration by the White House, and I would hope they would respond in a timely and responsible way," Boehner said Monday.
White House officials quickly rejected the offer, saying it "did not meet the test of balance" because it did not raise rates on top earners.
Obama made his plan to raise taxes on the rich a central element of his re-election campaign this year, but congressional Republicans insist they won't support any deal that includes a tax increase.
Republicans' own plan would raise new revenue -- about $800 billion -- by closing loopholes and possibly limiting tax deductions rather than by increasing tax rates. But the tax reform that Republicans are advocating would be a complicated endeavor that would take months, at least, and wouldn't begin until next year.
The Republican plan also calls for$600 billion in savings through Medicare reforms that aides said could include raising the eligibility age for future retirees. Democrats have been cool to the idea of trimming entitlement programs as part of this deficit-reduction deal, but Republicans said it's crucial.
"I don't think there is any way to get to a comprehensive deal without it," a GOP aide said.
The Republican plan includes $600 billion in spending cuts and caps. It also would alter the way the government calculates the inflation rate, a move that would save $300 billion largely by reducing cost-of-living adjustments for Medicare and Social Security recipients.
Congress has less than a month to reach a compromise. If it fails, January will usher in a slew of massive tax increases and automatic spending cuts that economists say will send an already ailing economy over the fiscal cliff and into crisis.
Republicans said they based their counterproposal on the earlier work of bipartisan panels and task forces that studied in detail how best to deal with the nation's massive budget debt and the growing cost of entitlement programs like Medicare. The plan draws specifically from a proposal offered in 2011 by former Clinton White House Deputy Chief of Staff Erskine Bowles,who co-chaired Obama's debt-reduction commission.
Bowles called for tax reforms that would allow tax rates to be lowered while reducing spending by more than $1 trillion.
Republicans noted that they refrained from offering the much more partisan budget proposal authored by Rep. Paul Ryan, R-Wis., the former Republican vice presidential nominee, which is heavier on spending cuts.
"The discussion today,"a Boehner aide said, "is what would be a fair middle ground."