A new John Boehner tax deal proposes lifting the debt ceiling once again. The United States is expected to reach the $16.4 trillion debt cap in early February of 2013 at which point the Federal government is not allowed to borrow any more money. The relative closeness of the debt ceiling has led it to become part of the Fiscal Cliff negotiations.
The offer came Friday, according to people in both parties familiar with the talks, as part of the latest effort by Boehner (R-Ohio) to strike a deal with President Obama to replace more than $500 billion in painful deficit-reduction measures set to take effect in January.
The Inquisitr says, Boehner reportedly extended the offer of increasing the top marginal income tax rate to 39.6 percent for those making more than $1 million per year. Previously, Democrats had identified the $1 million mark as being “the rich” but after President Obama won re-election they shifted their goal to $250,000.
This tax increase on the rich would bring in about $45 billion in extra revenue per year, or $450 billion over 10 year. Unfortunately, this revenue increase hardly makes a dent in the $1.33 trillion budget deficit.
According to the Associated Press, in return Republicans would agree to lift the debt ceiling for another year but they also desire that Democrats allow for $100 billion in spending cuts, or $1 trillion over 10 years.
This was the first time Boehner put higher income tax rates on the table and numerous sources said that broke the logjam in the talks. In theory, a deal could be struck by midweek.
The question now boils down to what President Barack Obama offers in return. Such major questions, still unanswered so close to the end of the year suggest, however, that no spending and tax agreement is imminent.
The Reuters reports, the White House has not accepted the proposal and the source could not confirm any additional talks were held on Sunday between Obama and Boehner.
In 2011, a protracted fight over the debt limit ended with only hours left before the government would have run out of money. Even though Congress and Obama reached an agreement, the political wrangling led to the first ever downgrade of the nation’s credit rating.
“Boehner has now accepted the premise of higher rates. So now we’re just arguing over details. I think it’s a significant step,” said Greg Valliere, chief political strategist at Potomac Research Group.
Boehner and Obama have not spoken directly since the phone call Friday afternoon in which Boehner extended his latest offer. With Obama in Newtown, Conn., to attend a Sunday-night service for victims of Friday’s school massacre, aides were uncertain when their next meeting would take place.
The Huff Post writes, Boehner’s office said Sunday that the speaker’s stance on the debt ceiling has not changed.
“Our position has not changed,” Boehner spokesman Michael S. Steel said in a statement. “Any debt limit increase would require cuts and reforms of a greater amount.”