US & Canada

Republicans make fiscal cliff counter-offer

US Speaker of the House Rep John Boehner speaks during a news conference 30 November 2012
Image caption House Speaker John Boehner said Republicans were offering a "credible plan"

US Republicans have countered White House plans to avoid the so-called "fiscal cliff", with a $2.2tn (£1.4tn) proposal including changes to benefits.

The plan would cut $600bn from federal health programmes and decrease cost of living adjustments to Social Security.

President Barack Obama offered a $1.6tn deal last week that involved tax rises and spending cuts.

The White House quickly rejected the Republican offer, saying it did not meet "the test of balance".

White House Communications Director Dan Pfeiffer said the plan "promises to lower rates for the wealthy and sticks the middle class with the bill".

He added it "includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close or which Medicare savings they would achieve".

'Common ground'

Unveiling his plan earlier in the day, House Speaker John Boehner said Mr Obama - who wants tax rises for the wealthy - had made a "la-la land" offer.

"We could have responded in kind, but we decided not to do that," Mr Boehner said. "What we are putting forward is a credible plan that deserves serious consideration by the White House."

Both sides want to avoid the economic double-punch of expiring tax cuts and automatic spending reductions, scheduled to come into effect on 1 January if no deal is passed.

In a letter addressed to the White House, House Republicans made the offer to increase tax revenue by $800bn over a decade, but said they would keep current tax cuts put in place - including those for wealthier earners targeted by Mr Obama.

The offer does not specify how the new revenue would be found.

Among the other potential changes would be an increase in the eligibility age for Medicare - a government-sponsored health programme for senior citizens. There would also be changes to the way Social Security makes inflation adjustments.

Senate Republican Leader Mitch McConnell called the counter-offer a "good-faith effort to find common ground".

But the Republican plan is certain to create opposition from defenders of Social Security, as well as Democrats deeply sceptical of raising the Medicare age.

The White House offer, delivered by Treasury Secretary Timothy Geithner and defended on a series of TV chat shows on Sunday, includes a $1.6tn rise over a decade, an extension of the temporary Social Security payroll tax cut, as well as heightened presidential power to raise the national debt limit.

The last fight over the debt limit, in the summer of 2011, ultimately ended with Congress passing the bill establishing the automatic spending now due to go into effect.

The president's deal also included $600bn in spending cuts, including $350 billion from Medicare and other health programmes.