Obama Aides Defend White House 'Fiscal Cliff' Plan

A day after Republicans rejected President Barack Obama's proposal to avoid a year-end "fiscal cliff," administration officials on Friday sought to defend the plan claiming it does not seek to prevent spending cuts or rely heavily on tax hikes.

The plan outlined by Treasury Secretary Timothy Geithner to Republican congressional leaders would achieve $4.5 trillion in savings to the government, Reuters quoted officials of the Obama administration as saying.

The defense of the plan comes a day after Obama told Speaker of the House John Boehner Thursday that there would be no agreement to avert the "fiscal cliff" unless tax rates are increased on those making more than $250,000 per year. Boehner responded by expressing concern that Democrats have shown no willingness to reduce the rate of growth in entitlement spending.

The White House plan includes around $1 trillion in cuts already enacted into law and would set up an "expedited process" to spirit through Congress some of the most comprehensive legislation in decades, the officials, who were not identified, said, adding that the proposal seeks comprehensive reform of the U.S. tax code and overhaul of federal programs like Medicare by next Aug. 1, 2013.

Including some immediate savings such as taxing the rich at a higher rate, proposals for next year would raise about $1.5 trillion in new revenues, and those proposals would also involve an additional $2.4 trillion in spending cuts, the officials said.

However, the war savings that were part of previous failed deficit-reduction negotiations are still part of the plan. Some of those proposed spending cuts count $800 billion in savings from the wars in Iraq and Afghanistan that are winding down.

The stalemate over the issue continues. After meeting with Geithner on Thursday, Boehner told reporters, "No substantive talks have been made in talks between the White House and the House over the last two weeks." The speaker also complained that while he has made concessions on tax revenue, Democrats have not agreed to any spending cuts. Only Republicans have offered a "balanced plan" (both revenue increases and spending cuts) while Democrats only want revenue increases, Boehner added.

Boehner has said that the revenue increases should come from tax reform (eliminating deductions and credits) instead of tax rate increases. Democratic leaders have insisted that tax rate increases on the upper income must be part of any agreement to avoid the fiscal cliff.

After the November election, Boehner and other House Republicans expressed willingness to accept additional revenue as part of a compromise. However, Democratic leaders have focused on what they are unwilling to compromise on.

During his 2008 campaign, President Obama said he wanted the Bush tax cuts to expire for those making more than $250,000 per year and to make the tax cuts permanent for everyone else. This was also his position throughout his first term and during his campaign for re-election this year. The president hasn't budged from his position.