In new 'cliff' bid, Obama seeks $1.2 trillion in revenue: source

Obama

In a major counteroffer that moves the White House and congressional Republicans closer to resolving the "fiscal cliff" standoff, President Barack Obama is now seeking $1.2 trillion from higher tax revenues, including increased rates on those earning more than $400,000 a year, a source familiar with the negotiations said on Monday.

In exchange, the president is willing to agree to $1.22 trillion in spending reductions, including some cuts achieved by changing the way cost of living adjustments are made to Social Security retirement benefits and other programs. By raising the threshold for tax increases to $400,000 from $250,000, the president is yielding on the level he had sought during his successful campaign for re-election in November "We view this as a good offer that shows we have met the Republicans more than halfway on spending and halfway on revenues," the source said.

House Speaker John Boehner's office called the president's bid a positive, if flawed step toward a compromise on an impasse that many from governments to businesses to private citizens have been urging the two sides to resolve.

"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," Boehner spokesman Brendan Buck said.

Obama's spending reduction proposal counts $290 billion in interest among spending reductions, and does not count an estimated $90 billion in increases in revenue from cost of living adjustments, hence the different numbers.

"We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem," Buck said.

The proposal comes as the president and Boehner seek to iron out differences in an effort to stop automatic tax increases and spending cuts from going into effect early next year. Analysts have warned that the abrupt shock could knock the economy back into recession.

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