Barack Obama (AFP/Getty Images)
WASHINGTON — Details of a compromise deal to end the fiscal-cliff crisis have begun to emerge, even as the White House and Republican leaders yesterday complained publicly that the talks had stalled.
The deal being whispered about in the halls of Congress has both the higher taxes on the rich that President Obama demands, and spending cuts to entitlements, including Medicare and Social Security, that Republicans want.
These hints about a possible deal coincided with an accelerated pace of backroom bargaining. Offers and counteroffers were shuttled back and forth yesterday between the White House and the office of House Speaker John Boehner (R-Ohio).
Obama and Boehner also spoke by telephone.
The White House put up an offer of $1.4 trillion in new tax revenue, down from its initial bid of $1.6 trillion in higher income, capital-gains and inheritance taxes on the rich.
Republicans were unimpressed.
Meanwhile, the compromise plan discussed among Washington insiders included raising the top income tax rate from the current 35 percent to 37 percent.
It would be a major concession for Republicans, but it’s smaller than the hike to 39.6 percent that Obama has proposed and that would automatically take effect if the Bush-era tax cuts expire Jan. 1. GOP leaders have balked at any increase in tax rates, although a growing number of rank-and-file Republicans have conceded that higher tax rates are probably inevitable.
The compromise also would slash spending on entitlements — the main driver of runaway federal debt — by increasing the Medicare eligibility age from 65 to 67 and lowing annual cost-of-living adjustments for government benefits, including Social Security.
That would be a major concession by Democrats, who have wanted to put off until later any tinkering with safety-net programs.
These measures were among the proposals floated by House Republicans.
Without a deal by the new year, steep tax hikes would hit nearly every American, and there would be deep reductions in federal spending, especially on the military.
Beyond higher taxes hitting the rich and the middle class, the fiscal-cliff compromise would also hike inheritance, dividend and payroll taxes, as well as restore the “marriage penalty.”
The tax on most capital gains would go up — from 15 percent to 20 percent.
Amid the backroom haggling, Boehner blasted Obama for “slow walking” negotiations and not offering specific spending cuts to address federal debt — now at more than $16 trillion.
Obama and Congress created the fiscal cliff last summer as an automatic debt-cutting plan after budget talks failed.