Obama offers a scaled-down budget plan to avert 'fiscal cliff'

WASHINGTON -- In the aftermath of House Speaker John Boehner’s defeat on his “Plan B” tax plan, President Obama offered a scaled-down, stopgap budget proposal Friday afternoon designed to avert tax increases and spending cuts due to take effect next month.

Obama’s latest proposal would raise taxes on wealthier Americans, extend jobless benefits for 2 million Americans and lay unspecified groundwork “for further work on both growth and deficit reduction.”

Before leaving for his home state of Hawaii for a short Christmas vacation, the president spoke with Boehner on the telephone and met with Senate Democratic leader Harry Reid of Nevada. Then Obama delivered brief remarks before reporters in the White House press room.

The new offer appeared to be a rollback of proposals Obama made in talks that Boehner broke off earlier in the week.  Obama did not explicitly say so, but he again wants to raise taxes on all household income over $250,000 -- his initial position -- and to temporarily postpone spending cuts that are scheduled to begin in January. He would keep tax rates the same on the first $250,000 for families and $200,000 for individuals.

The president ignored shouted questions from reporters after delivering his remarks.

Earlier, during negotiations with Boehner, R-Ohio, Obama had offered to extend the George W. Bush  ax cuts on income up to $400,000 and had offered spending cuts, including changes in the inflation adjustment for Social Security that angered liberal Democrats.

Obama said the latest plan was designed to allow leaders to reach an agreement that Congress  could vote on after Christmas and that he could sign into law before Jan. 1.

“It’s that simple,” he said. “In this Congress, laws can only pass with support from Democrats and Republicans. And that means nobody gets 100% of what they want. Everybody has got to give a little bit, in a sensible way.  We move forward together or we don’t move forward at all.”

That, of course, has always been the case, and there were no indications that progress would be easy in the final 10 days before the fiscal cliff deadline.

Obama’s remarks were his first in public on the stalled budget talks since opposition from conservative House Republicans dealt Boehner a severe setback Thursday night, forcing the speaker to abandon his “Plan B” tax initiative and diminishing prospects that a deal can be reached.

Boehner’s office responded Friday evening with a statement that echoed combative comments he made at a Capitol news conference earlier in the day.

“Though the president has failed to offer any solution that passes the test of balance, we remain hopeful he is finally ready to get serious about averting the fiscal cliff,” Boehner spokesman Brendan Buck said in an emailed comment. “It is time for the Democratic-run Senate to act, and that is what the speaker told the president tonight.”

The New York Times’ Jonathan Weisman reported that Reid would introduce the stopgap measure only if Republican leader Mitch McConnell agreed not to filibuster it on the Senate floor.  McConnell, asked Friday whether he would allow the proposal to come up for a vote, said, “Merry Christmas,” and stepped into a waiting elevator.

Obama said again that he had compromised with Republicans during the budget talks, meeting them "halfway on taxes” and “more than halfway on spending,” conclusions that Republicans strongly dispute.

The president said his new proposal was “an achievable goal.” Left unsaid was that the new offer contained no spending cuts at all.

Obama said solving the nation’s fiscal problems might require “several different steps,” a tacit acknowledgment that the grand bargain he had hoped to strike with Boehner is now a remote possibility, at best.

-- Paul West, Los Angeles Times