UPDATE 1-In new 'cliff' bid, Obama seeks $1.2 trillion in revenue -source

WASHINGTON, Dec 17 (Reuters) - In a major counteroffer that

moves the White House and congressional Republicans closer to

resolving the "fiscal cliff" standoff, President Barack Obama is

seeking $1.2 trillion from higher tax revenues, including

increased rates on those earning more than $400,000 a year, a

source familiar with the negotiations said on Monday.

In exchange, the president is willing to agree to $1.22

trillion in spending reductions, including some cuts achieved by

changing the way cost of living adjustments are made to Social

Security retirement benefits and other programs.

"We view this as a good offer that shows we have met the

Republicans more than halfway on spending and halfway on

revenues," the source said.

The offer asks for Congress to increase the national

borrowing ceiling for two years using a parliamentary procedure

proposed by Senate Republican leader Mitch McConnell.

The offer comes as the president and House of

Representatives Speaker John Boehner seek to iron out

differences in an effort to stop automatic tax increases and

spending cuts from going into effect early next year. Analysts

have warned that that abrupt shock could knock the economy back

into recession.

The president's latest offer shows him willing to give on an

item that some of his supporters had sought to protect --

linking Social Security benefit increases to the chained

consumer price index, a step that would lead to lower payments.

However, the president's proposal would seek to protect

those on whom that change would fall hardest, the source said.

The president's offer also would seek to provide the

sluggish economy a boost by extending unemployment benefits and

increasing infrastructure spending.

Most Popular in Business