As the fiscal cliff looms closer, don’t hold your breath for a deal—progress, if any, is slow. But at this point, any progress is better than nothing at all.
In the latest episode, House Speaker Boehner has proposed $1 trillion through higher tax revenue over the next decade, achieved in part by an increase in the top tax rate for people earning in excess of $1 million per year, US News reports.
Boehner would also agree to an extension of the government’s borrowing limit, allowing one year before the government would need to address the issue again.
In exchange, the President needs to agree to $1 trillion in cuts, mostly from programs such as Medicare. Further, Social Security adjustments for inflation would need to be more modest.
Boehner’s offer would bring in $450 billion by increasing the top tax rate on $1 million-plus earners, $70 billion over ten years through slowed inflation adjustment, and the rest through tightening up the tax code.
At any rate, it’s better than seeing tax rates go up across the board in January, along with $109 billion in spending cuts all over the place. The economy is simply too fragile to survive that kind of a shock, and many believe a second recession or even full-scale economic collapse would be inevitable.
Of course, it remains to be seen whether an ideologically-fractured Congress can get its act together long enough to consider the proposal sensibly.
President Obama has proposed tax rate increases on households making more than $250,000 per year, which could bring in $800 billion over the next ten years when combined with revenues from an increased tax rate on investment income could.
Despite Boehner’s newly-conciliatory proposal, he’s still up against Norquistian fanatics.
The President, for his part, has proposed $600 billion in spending reductions over ten years, of which $350 billion comes from federal healthcare programs and another $250 billion from various domestic programs.
It’s a closely-fought game, and there isn’t a great deal of time remaining until matters will have to come to a head.