Republicans reject 'ridiculous' Obama fiscal proposal

Republicans rejected as "ridiculous" a White House plan to raise $1.6 trillion in new taxes over the next decade, as crunch talks on the US deficit took a turn for the worse. A congressional Republican aide familiar with the White House proposal -- presented by Treasury Secretary Timothy Geithner in talks with House Speaker John Boehner -- said the offer was a rehash of President Barack Obama's budget request. "The White House keeps saying it wants a 'balanced approach' but this offer is completely unbalanced and unrealistic," the aide said, as talks stalled on how to avert looming tax hikes and automatic federal spending cuts. "It calls for $1.6 trillion in tax hikes -- all of that upfront -- in exchange for only $400 billion in spending cuts that come later," he added. Boehner himself made no comment on the specifics, but told reporters he was "disappointed" with the offer. "Going over the fiscal cliff is serious business," said Boehner. "I'm here seriously trying to resolve it. And I would hope the White House would get serious as well," he said, adding that "no substantive progress has been made" since negotiations began more than two weeks ago.  The $1.6 trillion is nearly double what would be raised if tax breaks for the wealthiest two percent of Americans were to expire, which means the White House is seeking hundreds of billions of dollars in additional revenues over the next 10 years. It is also double the amount the White House hoped to raise in tax revenue through a "grand bargain" that fell through in July of 2011, when Democrats and Republicans clashed over raising the US debt ceiling. The White House and the Republicans must reach an agreement by the end of the year that lowers the ballooning US deficit by $1.2 trillion over 10 years, as mandated in a poison pill deal agreed last year. If they don't, tax cuts in place since the presidency of George W Bush will expire and $500 billion in across-the-board spending cuts would kick in -- a double whammy that could knock the US economy back into recession.The White House estimates most American households would be hit with $2,200 in additional taxes. "While $1.6 trillion is the White House's public position, it is ridiculous to offer that amount two weeks after negotiations began -- and less than a month before we must have a solution," the Republican aide said. There is broad agreement that Bush-era tax cuts should remain for everyone making less than $250,000 per year, but while Obama's Democrats want the cuts to expire for the wealthiest two percent, Republicans are opposed. Republicans have also demanded action on reform of entitlement programs such as Social Security, the national pension program for the elderly. The White House proposal also features new stimulus spending and a permanent end to congressional control over federal borrowing limits -- the issue at the heart of last year's spending fight. Boehner complained of a lack of progress, but Senate Majority Leader Harry Reid, who met separately with Geithner, shot back that Democrats have seen no "serious offer" from Republicans, who are divided over whether to agree quickly on keeping rates low for middle-income families. Democrats pushed through legislation in the Senate that would let the top tax rate rise from 35 percent to 39.6 percent while keeping middle-class rates unchanged, and have urged the Republican-controlled House to pass the bill. Boehner has refused to bring it to the floor, despite some calls for the bill from within his party. Congressman Tom Cole made waves when he broke ranks recently to urge fellow Republicans to extend the middle-class tax cuts now, and thrash out a deal on top earners next year. Both sides have spoken of their desire for a long-term agreement that would tackle the chronic national deficits and debt, but they were still far apart on Thursday. Senate Minority Leader Mitch McConnell said the White House "took a step backward, moving away from consensus and significantly closer to the cliff." White House spokesman Jay Carney insisted there had been some progress on the idea of revenues, but income tax rates remained a problem. Republicans had yet to "accept the essential fact" that rates will "have to go up," Carney said.