Last week saw the release of President Obama’s opening offer in negotiations over the fiscal cliff. The president proposed that Republicans go along with $1.6 trillion real tax hikes, assorted mostly-fake spending cuts, $400 billion in maybe-Medicare cuts at some to-be-determined point in the future, some new stimulus spending, and a pony with a diamond-crusted saddle.*
This afternoon Republicans came back with a counteroffer: No pony, no income tax rate hikes, but they could perhaps agree to $800 billion in new revenue to be generated by tax reform as laid out last year by Erskine Bowles, the co-chair along with Alan Simpson of the president’s own deficit reduction commission.
The Bowles proposal was a modified version of the original Simpson-Bowles plan, lighter on new tax revenues and somewhat heavier on spending cuts. Here’s Politico’s summary of the proposal that Bowles alone made to the debt-reduction Supercommittee—not to be confused with the original presidential debt commission—at the end of 2011:
Over the course of the next decade, the new Bowles proposal would raise $800 billion in revenue, cut $600 billion from health care programs, slash annual discretionary spending by $300 billion, save $400 billion in interest payments because of the other cuts, and reap $200 billion from changes to the way the consumer price index is calculated, he told the members of the supercommittee.
Democrats weren’t exactly thrilled with the Bowles proposal last year. I doubt they’ll be particularly excited about it again. But the primary purpose of the GOP’s counteroffer is to illustrate their interest in negotiating. Obama’s opener was basically a request to pass the White House budget plan with essentially no compromises. It wasn't a real proposal so much as a show of force made at least partially in hopes of getting Republicans to fold quickly. Today’s GOP counteroffer, on the other hand, is designed to make Republicans look like they’re willing to make substantive concessions in order to get to some kind of deal.
Both opening bids are best understood as positioning statements rather than actual stabs at putting together a viable deal. They tell you as much about how the parties want to be percieved than they do about what might actually make up the substance of an eventual agreement: Obama wants to be seen as strong. Republicans want to be seen as reasonable. Whether either side actually lives up to the way they want to be percieved remains to be seen.
*The part about the pony is not true, technically.