Obama Says Tax-Cut Extension Could Ruin Christmas

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Boehner condemns raising rates, yet didn’t flatly rule it out during the day. It was a step Majority Leader Eric Cantor, R-Va., took. “We don’t want to increase tax rates, we’re not going to increase tax rates,” he told reporters.

For their part, Democrats will decide how much savings to pull from benefit programs like Medicare, Medicaid and possibly Social Security without cutting guaranteed benefits, a line they vowed not to cross in earlier budget negotiations.

Obama’s opening proposal, delivered to Boehner and other Republicans by Treasury Secretary Tim Geithner on Thursday, calls for $1.6 trillion in higher taxes over a decade, hundreds of billions of dollars in new spending, a possible extension of the temporary Social Security payroll tax cut and enhancing the president’s power to raise the national debt limit.

The new federal revenue would include $950 billion generated by raising taxes on families with incomes over $250,000 and by closing certain tax loopholes by the end of this year, according to administration officials who described the offer Friday only on condition of anonymity. The remainder would be achieved through an overhaul of the tax system next year and would not become effective until 2014, said the officials, who were not authorized to provide the details by name.

Obama is seeking new spending to help the unemployed, homeowners whose property’s value is less than their mortgage, doctors who treat Medicare patients and wage-earners.

In exchange, the president would back cuts of an unspecified amount this year and savings of as much $400 billion from Medicare and other benefit programs in 2013.

Republicans said they were surprised at the plan, and Democrats wondered aloud why.

“Each side said they’d submit a down payment. We have. Our preference is revenue. What is theirs?” said Sen. Chuck Schumer, D-N.Y.

Republicans have an opening offer of their own, in line with their conservative anti-tax views, much as Obama’s is designed to solidify his own political position. While agreeing to new revenue, GOP lawmakers want to extend expiring income tax cuts at all levels, including the top brackets. They also want to raise the age of eligibility for Medicare and curtail future cost-of-living adjustments for Social Security and other benefit programs. The same adjustment would raise revenue for the government by making a change in annual adjustments of tax brackets.

“We’re the only ones with a balanced plan to protect the economy, protect American jobs and protect the middle class from the fiscal cliff,” Boehner said on Friday.

That was a jab at Obama, who campaigned for re-election advocating a balanced approach to avoiding the fiscal cliff that combines higher taxes on the wealthy with spending cuts.

“In Washington, nothing’s easy, so there is going to be some prolonged negotiations,” said President Obama.

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