Republicans have rejected President Obama’s opening budget bid.
In a Capitol meeting with House Speaker John Boehner Thursday, Treasury Secretary Timothy Geithner submitted the Obama administration’s proposal for addressing medium term deficits, and avoiding across the board tax increases and spending cuts at the end of the year.
Republicans called the proposal outlandish and brushed it aside as unserious. But it’s almost entirely comprised of policies Obama campaigned on and included in his budget for the current fiscal year. And by satisfying GOP demands that Obama offer up a plan that includes spending cuts, it paints Republicans, who have been reluctant to specify their own Medicare cut proposal, into a tight corner.
The White House formally proposes to increase tax revenues by $1.6 trillion over 10 years by increasing top marginal income tax rates and taxes on both capital gains and dividends, and by limiting tax deductions for top earners, according to Republicans.
Obama proposes to reinstate the estate tax at its 2009 level, as well as patch the alternative minimum tax.
The administration asked Republicans to boost the economy, too, by either extending the payroll tax cut, or replace the holiday with a similar stimulus, such as the Making Work Pay tax credit in the Recovery Act. They also want to extend emergency unemployment benefits.
On top of that, the administration proposes $50 billion in new infrastructure spending, as well as a mortgage refinancing program. The plan would prevent automatic reimbursement cuts to physicians who treat Medicare beneficiaries, and would eliminate congressional control over the debt limit altogether.
In exchange, the administration proposes a tax reform proposal consistent with its $1.6 trillion in new tax revenues taken from top earners, and to cut 10-year deficits overall by $4 trillion, including $400 billion in savings from Medicare and Medicaid in Obama’s budget.
