Obama Makes Third Fiscal Cliff Offer

WASHINGTON -- The White House made a new offer to House Speaker John Boehner (R-Ohio) on Monday to avoid the so-called fiscal cliff. The proposal matches the amount of spending cuts with revenue-raisers, calls for two stimulus measures and seeks an avoidance of a debt limit fight for the next two years.

The details of the offer were sent to The Huffington Post on condition of the source's anonymity.

The White House has moved off of its initial and second revenue demands of $1.6 trillion and $1.4 trillion respectively. As of now, the president would be fine raising $1.2 trillion in revenue. He also is no longer insisting that taxes increase on families with income above $250,000. Instead, he is calling for a permanent extension of the Bush tax cuts for incomes of less than $400,000.

To meet the $1.2 trillion revenue goals, the White House proposal calls for limiting the tax benefit of itemized deductions to 28 percent for taxpayers. It would return the estate tax to 2009 parameters, which would mean that estates worth more than $3.5 million would be taxed at a 45 percent rate.

The compromise on revenue may be difficult for some in the president's own party to swallow, though few would have imagined the White House scoring such a victory just one year ago. The spending cuts in the new proposal could be a harder sale.

In his latest offer to Boehner, the president proposes $800 billion in savings, including $290 billion in interest savings, $100 billion in defense cuts, and $130 billion in savings that would come from an adjustment to the inflation index for Social Security benefits. The administration insisted that there would be "protections for most-vulnerable populations" perhaps by indexing the changes so that they don't affect those with low-income.

The president has refused to give in on another Republican demand: that he gradually raise the eligibility age for Medicare from 65 to 67. There is, however, $400 billion in health care savings included in his offer.

Additional components of the proposal include language that would call for the fast track pursuit of corporate and individual tax reform as well as "spending reform." The White House proposal calls for a permanent extension of certain tax extenders (which ones weren't made entirely clear) and the alternative minimum tax. The payroll tax cut passed two years ago would, under this proposal, be allowed to lapse without an apparent replacement - a major blow for progressive economists, who argue that the economy is too fragile to take such a hit.

The president is, however, pursuing some provisions that would make his base pleased. His plan calls for an extension of unemployment benefits -- set to expire at the end of this year - and money for infrastructure spending. How much money is unclear, though the president's first offer asked for $50 billion. Finally, he is demanding that the nation's debt limit be increased for two years. He will continue to allow Congress the right to periodically vote not to raise the ceiling, but he would grant himself veto power over those votes.

That may be too much for Boehner to swallow. In his last offer, the speaker signaled comfort with a yearlong extension of the debt ceiling, but nothing more.

An administration official said that this was not the president's "final offer," but one that the White House viewed as a legitimate halfway point between the two sides. The official noted that the president already agreed to a trillion dollars in spending cuts as part of the first debt-ceiling standoff. When adding those figures to this plan, one gets to $3.4 trillion in deficit reduction. When considering war savings, that number goes up to well over $4 trillion over a 10-year period.

Boehner's office did not immediately return a request for comment

UPDATE: Boehner's spokesman Michael Steel emailed this response:

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. 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.