Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.
The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.
In all, the administration's fiscal plan would cut $4 trillion from from the deficit over the next decade, the vast majority of it coming from increased revenue, cuts agreed to last year during the debt limit fiasco, and drawdowns in military spending from ending the wars in Iraq and Afghanistan. But the plan isn't just about deficit reduction: it also includes immediate stimulus measures to boost the economy and protect the jobless and it seeks to end the debt limit charade by eliminating the archaic rule altogether.
In other words, this is the kind of offer you'd expect from someone who just won reelection after debating these very issues. And, as you might expect, Republicans are already saying no, even though they lost the election—including losing more than a million more votes than Democrats in House races, only retaining their majority thanks to redistricting. As Boehner put it yesterday:
“The Democrats have yet to get serious about real spending cuts,” Mr. Boehner said after the meeting. “No substantive progress has been made in the talks between the White House and the House over the last two weeks.”
We can speculate until we're blue in the face about what will ultimately happen, but two big things are clear. First, the White House is not negotiating this deal like it's 2011. It's not that they aren't willing to compromise—it's that they aren't going to negotiate against themselves. Second, Republicans don't have the leverage they did in 2011. That's partly a result of the White House negotiating posture, but it's also because the key elements of the deficit reduction plan are already law.