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Payroll Tax Relief Extension Off the Table as Obama, Boehner Move Closer to Fiscal Cliff Deal

Washington Post (12/18/12) Lori Montgomery; Paul Kane

President Obama and House Speaker John Boehner (R-OH) have moved close to agreement on a plan to avert the fiscal cliff, but they have yet to clear several critical hurdles, including winning the support of wary House Republicans. Obama made a proposal on Monday that would raise revenues by $1.2 trillion over the next decade but keep in place the Bush-era tax rates for any household with earnings below $400,000. The offer is close to a plan proposed by the speaker on Friday, and both sides expressed confidence that they were closing in on a major deficit-reduction plan that could be passed well before January.

Obama is reportedly no longer seeking a permanent mechanism to increase the U.S. debt limit, but would settle for a two-year increase in America’s borrowing authority. In a further concession to Republicans, Obama agreed to apply a less generous measure of inflation to government calculation, which would result in lower benefits in the Social Security pension system over time, a person familiar with the talks says. Of the $800 billion in straight cuts proposed by the president, half would come from federal health care programs; $200 billion from other so-called mandatory programs, like farm price supports, not subject to Congress’s annual spending bills; $100 billion from military spending; and $100 billion from domestic programs under Congress’s annual discretion.