We’ve come a long way since the GOP primary, when all of the Republicans vying for the presidency pledged to reject any deficit plan that included higher taxes, even if the revenues were outstripped 10 fold by cuts to federal spending.Now that the election’s over, House Speaker John Boehner (R-OH) is striving for a one-to-one cuts to revenue ratio.
“Most people would agree that that’s balanced,” he told reporters Thursday.
But just yesterday, President Obama offered Boehner a deal that combined $1.2 trillion in revenue increases on individual income with $1.22 trillion in cuts to federal spending.
So why don’t we have a deal? It’s a maths problem.
The explanation is largely a function of negotiating gimmicks that have arisen in previous, failed budget talks. And it represents the biggest remaining hurdle in the ongoing effort to avoid the full effects of the fiscal cliff.
“Any movement away from the unrealistic offers the President has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced,” said Boehner spokesman Michael Steel in an email to reporters Monday night.
One deal, two sets of numbers. The White House revenue and spending numbers are nearly identical, while Boehner suggest a $370 billion gulf between revenues and spending — and he won’t shake hands until he can claim he narrowed it.
The difference between the two sets of numbers arises because of arbitrary ways the White House and the speaker’s office count spending cuts and revenues. Specifically, the White House isn’t counting the $60 billion in new revenue that the Treasury would collect if Congress indexed tax brackets to chained CPI. Round up a little, and it accounts for the $100 billion difference between the White House’s revenue number and the speaker’s.
On the spending side, the White House accounts for the fact that lowering projected deficits will reduce the amount the government is projected to spend on interest on the debt over the next 10 years. Some $290 billion, by the administration’s calculations. Boehner doesn’t want to count interest savings toward the spending cuts in any final agreement.
Both parties say they don’t have much more room to negotiate, and Republicans are preparing a fallback bill to provide themselves cover if negotiations fall apart. But in the grand scheme of things, the biggest point of contention between Obama and Boehner is fairly modest. Particularly when viewed over the course of the 10-year budget window.