President Obama Offers a Deal

John Boehner

In addition, Plan B would delay any discussion of the fiscal cliff’s across-the-board spending cuts until next year, at which time Republicans would use the looming expiration of the debt-ceiling as a cudgel to maximize spending cuts to Medicare while minimizing cuts to defense. That would be déjà vu all over again.

Mr. Boehner’s plan may be merely an opportunity for Republicans to show they went kicking and screaming into the deal that Mr. Obama has put forward. Or it may be a genuine attempt to scuttle the deal. Either way, their intransigence is astonishing because the deal that Mr. Obama has put on the table should make it easy for them to say yes.

The president has met Republicans halfway on tax increases — mainly by agreeing that higher income tax rates will apply only to taxpayers making more than $400,000, versus the $250,000 threshold he campaigned on, and by agreeing to keep the rate on dividend income at 20 percent, versus 39.6 percent as called for under current law. He also met them more than halfway on spending cuts, mainly by increasing his spending cut total to $930 billion over 10 years, from $600 billion originally, versus $1.2 trillion in cuts demanded by Republicans.

Most significantly, a large chunk of the president’s new revenues and spending cuts — $225 billion over 10 years — comes from embracing a Republican-backed idea to apply a new measure of inflation to the budget and tax code. Called the “chained” Consumer Price Index, the new gauge would both slow the growth of Social Security cost-of-living increases and the pace at which tax brackets rise each year, thereby pushing taxpayers more quickly into higher brackets.

There is no doubt that if Mr. Obama were a more combative negotiator, he would not have gone for the chained index. It reinforces the incorrect notion that the big budget problem is overly generous benefits. But Social Security is not to blame for the deficit and health care spending, mainly for Medicare, is driven more by lavish payments to drug companies and other providers than by payments to beneficiaries.

It also applies to people far below Mr. Obama’s oft-cited $250,000 threshold. The administration will reportedly include provisions to shield low-income beneficiaries, but, for most people, the price index changes would mean benefits that rise more slowly and taxes that rise more quickly than would otherwise be the case.

In exchange for those bitter pills, there are laudable aspects to the administration’s proposed deal. In addition to new revenue from a higher top rate, the Medicare eligibility age would be kept at 65, federal unemployment benefits would be extended, infrastructure spending would be increased and the debt ceiling would be off the table for two years. But to gain those provisions, Mr. Obama has offered to give away a lot, both politically and substantively. Mr. Obama should make clear that if Republicans don’t come around soon, the deal is off the table — and that the fight on another day will not be on terms anywhere near as favorable as those he has offered this week.

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