Republicans proposed revenue-generating tax reforms and steep spending cuts on Monday in their first formal proposal to avert a "fiscal cliff" that could push the U.S. economy into recession.
After days of stalemate, the Republicans' offer showed deep differences with President Barack Obama as the two sides work to head off across-the-board spending cuts and tax increases due to take effect in January.
But the proposal could allow negotiators to begin their work in earnest as both sides now have outlined their visions in concrete terms. Analysts say the talks will have to show tangible progress this week to ensure that a deal can be signed into law before the end of the year.
"If you are agreeable to this framework, we are ready and eager to begin discussions about how to structure these reforms so that the American people can be confident that these targets will be reached," House of Representatives Speaker John Boehner of Ohio and several other House Republican leaders wrote in a letter to Obama.
The Republican proposal would overhaul the complicated U.S. tax code to raise $800 billion in new revenue over 10 years, roughly half the total Obama is seeking.
But the Republicans said they would oppose raising tax rates on the wealthiest 2 percent of U.S. households, a central element of Obama's proposal.
The plan would also trim government healthcare costs by $600 billion over a decade, $250 billion more than Obama proposed in his opening bid last week.
It would slow the growth of cost-of-living increases on federal benefits by $200 billion by changing the way they are calculated and cut other government spending by $600 billion.
Using the White House's accounting methods, the Republican proposal would reduce annual budget deficits by $4.6 trillion over 10 years, within shouting distance of the $4.36 trillion in savings proposed by Obama.
But the relative similarity of the headline number masks stark differences in how those savings would be achieved.
MUTUAL DISTRUST
The cuts proposed by Republicans are sure to face fierce resistance from Democrats, who are still smarting over $1.1 trillion in cuts that Republicans extracted in a budget deal last year.
And Obama has insisted that he will not sign any deal that does not raise taxes on the wealthiest households -- a step Republicans have resisted so far, even as they expressed a new willingness to reconsider the anti-tax stance that has defined the party for decades.
Negotiators must overcome more than just mutual distrust as they work toward a deal in coming weeks. While some business leaders and grassroots groups are urging Washington to craft a "grand bargain" that would put federal finances on a sustainable course, lawmakers also face a more immediate lobbying blitz from groups that worry that any deal could decimate favored federal programs.
Anti-tax activist Grover Norquist has been in the spotlight as he pressures Republicans to stick by a pledge many have signed to oppose any tax increases.
On the other side of the ledger, industry groups are scrambling to protect spending on everything from education to defense and scientific research. Liberal groups have mobilized to protect popular federal health and retirement programs.
"Everyone wants something to happen before the end of the year, but what's more important than having something happen is having the right thing happen," said Nancy Altman, co-director of Social Security Works, a coalition of liberal and labor groups.
"A bad deal is worse than no deal at all," she said.
