House Republican leadership considers a new proposal from the White House to avoid the so-called fiscal cliff "a small step in the right direction" but aides say that "there are still substantive issues that are unresolved."
The lack of an outright rejection of the White House's most recent proposal is noteworthy, hinting that both sides may be willing to come to an agreement with just 13 days until the New Year.
The reaction comes after the White House proposed Monday what they call a $2.4 trillion dollar deficit reduction package, including $1.2 trillion in new revenues and $1.22 trillion in spending reductions.
Included in the revenue increases is the expiration of the Bush-era tax rates for incomes of $400,000 and more, marking the first time the White House has moved on their stance of raising rates on incomes of $250,000 and more. The $1.2 trillion in increased revenue is also down from the $1.4 trillion in new revenues the White House included in their last proposal.
Republican leaders are looking at the White House's latest fiscal cliff proposal, which includes a $2.4 trillion dollar deficit reduction package and tax hikes on incomes over $400,000, marking the first time the Obama administration has changed its stance on tax rates. NBC's Chuck Todd reports.
But Republicans feel the package is not balanced, and say that interest savings included in the White House's $1.2 trillion in spending reductions should not be included in the proposal.
"When you attempt to use all of those interest savings in lieu of programmatic structural reforms like the ones that we've been talking about you further enhance the unbalance between revenue and spending," a Senior GOP Aide said.
Because of that, the aides say that the spending reductions included in the White House proposal only equals $850 billion, compared to the $1.3 trillion they see in revenue increases, something they say does not achieve the balance they are looking for.
Talks continued Monday as the fiscal cliff quickly approaches. Reports suggest both sides are submitting to certain concessions. NBC's Brian Williams reports.
Aides said that House Speaker John Boehner (R-OH) has agreed to allow marginal tax rates on incomes of $1 million or more to move back to the Clinton-era level of 39.6%. He would also raise revenue through limits on itemized deductions and expenditures, which they say would raise a total of around $700 billion. Aides said they would have to work out how they would raise more revenue according to the still-to-be-decided target number.
But the Republican aides said details are still lacking in how spending would be cut, and how the tax code would be reformed to achieve the increase in revenues and cuts that is eventually agreed upon.
On both sides, it appears the White House and Republicans have agreed, in principal, to make both the cuts to entitlements, and the tax increases, occur in a two-step process.
The first step would take place in January of 2013, after which the second step would take place in January of 2014, but would be so unsavory that fundamental reforms of both the tax code and entitlement programs would be far more appealing.
This approach would effectively create another cliff at the end of 2013, where Congress would be forced to agree on comprehensive reforms to entitlement programs and the tax code, or face an alternative that neither side would prefer.
The Republican Leadership Aides say they are still talking to the White House, and that talks will continue in the days to come. But they were quick to say that despite the way the White House depicts their most recent proposal, it doesn't come close to the "balanced approach" they are seeking.
Either way, the aides said that the difference between the White House and Republicans are not unresolvable in the coming days.
"The issues that we're talking about are not technically difficult to resolve," one Republican Leadership Aide said, "There are not hundreds of moving parts, but they may be fundamental issues that are difficult to resolve."
Also unclear is how Republicans on Capitol Hill will react to Speaker Boehner's concession on tax rates. The House Republican conference will meet on Tuesday morning, where aides say leadership will discuss the details of the fiscal cliff negotiations.