Hi, Wolf. Well, according to senior officials on both sides of the aisle, the president is asking for $1.6 trillion, excuse me, in new taxes. That includes raising taxes for families who make $250,000 or more. You’ll recognize that as a pledge from his campaign. And it also includes limiting deductions and loopholes as well as other changes to capital gains and dividends taxes. That is the headline for Republicans, Wolf, who say it is far more money in tax rates than they ever expected to hear from the White House in any offer. Moving on to some other aspects of the proposal, Secretary Geithner on Capitol Hill also outlined in this plan an intention to extend unemployment insurance, $50 billion in stimulus for next year, and creating some kind of permanent mechanism to extend the debt limit so we don’t repeat a crisis like last summer. 

 

Now what would they get in return? What would the White House give? The proposal is they would offer $400 billion in Medicare and other entitlement savings but exactly what those would be are to be determined in negotiations next year. Republicans, Wolf, they are saying this overreach too much. They are rejecting it. The White House says, hey, we’ll compromise. Come back to us with an offer. Wolf.

 

Jessica, as you say, the Republicans are already rejecting this outright, so was the administration surprised, shall we say, by that rejection? 

 

Well, their public response, yes, is surprise and they’re accusing the Republicans of avoiding a deal to protect the wealthy, but the truth is, this is a negotiating dance. The bottom line is they have been going back and forth for a few weeks and Democrats say they asked the GOP to be specific about what revenue number they would be OK with. Democrats say well, the Republicans weren’t forthcoming so Democrats said if you’re not going to show you yours, we’ll show you ours first. We’ll make an offer and we’ll come in high, and now the Republicans aren’t happy with it, but some Republicans in fact are telling me that conversations have moved backwards in the last 24 hours. This offer has made things worse. But Democrats in the White House feel this is what they need to do to lay down a marker and start moving forward, Wolf.