President Obama agrees not to increase taxes on the rich and cut down cost of living increases for the recipients of Social Security. Both moves show willingness of the president to save the economy from collapsing even if it means compromising on the promises that carried his successful campaign through the re-election.
With just two weeks before the fiscal cliff, it seems that the closed-door discussions between Presidentand House Speaker have finally begun to move forward. According to the latest developments on the issue, Obama’s new proposal, his third since the talks began after elections, has brought the two sides remarkably close to each other.
Obama showed willingness to reduce the cost of living increases in Social Security and other government programs. The president’s latest offer calls for raising $1.2 trillion in tax revenues on individual incomes, down from $1.4 in his last proposal and $1.6 in his initial offer. Most importantly, the new proposal now raises taxes on the wealthy whose incomes are above $400,000 as a couple, down from $250,000.
However, Obama wants lower income recipients to receive coverage against any loss they experience due to the agreement on scaling back future cost of living increases. Moreover, the latest proposal does not increase the age for Medicare eligibility from 65 to 67, as favored by the Republican leaders.
While the maneuverings in the proposals of both sides is being done to reach an acceptable deal before 2013, economists warn that combining the two proposals could potentially send the economy back into recession instead of saving it.
White House Press Secretary Jay Carney said that the president "is prepared to make tough choices. He also understands that his bill will not, as written, likely be what the final compromise, if there is one, looks like," he said. "But he insists and will insist before he signed anything that there is the balance that he seeks that is fair and that seniors aren't bearing the burden so that the healthy bear less — those who can afford it most bear less."
The talks continued for 45 minutes at the White House Monday. Boehner’s spokesman, Brendan Buck said that the steps taken by the president toward the Republican plan will pay off, but noted that the proposal is still not balanced, as it should be and talks will continue until both sides strike the right balance to solve the spending problem.