Negotiations are heating up as Congress and the president move closer to a deal on the fiscal cliff. Yesterday, U.S. House Speaker John Boehner (R-Ohio) and President Obama exchanged proposals to avert it. The most publicized difference was the amount of money to be raised from tax increases. The speaker offered to raise tax rates on people with incomes of more than $1 million per year, whereas the president offered to raise tax rates on those with incomes of more than $400,000 per year. The difference in revenue for the government is about $400 billion. This gulf will need to be bridged before any deal can be made.
In the absence of a deal, House Republicans are going to what they call “Plan B,” which is a bill that would keep tax rates steady for people making less than $1 million per year. This bill would not address other aspects of the fiscal cliff, such as sequestration, which would have devastating consequences for federally funded research.
Somewhat troubling about the president’s counteroffer was a recommendation for $100 billion cut in nondefense discretionary spending. This is the pool of money that federal funding for basic research comes out of. NDD spending already has been cut by $900 billion in previous budget negotiations, and, while Republicans have been in favor of more cuts to NDD spending, this was not a part of Obama’s opening position in negotiations. It remains to be seen what the outcome will be in the final fiscal cliff deal, but this is certainly a troubling development.
Stay tuned to the Policy Blotter as negotiations continue.