* White House dismisses Republican proposal
* Big gap between Republicans, Democrats on spending, taxes
* Liberal group: No deal is better than a bad deal
WASHINGTON, Dec 3 (Reuters) - Republicans proposed steep
spending cuts on Monday but gave no ground on President Barack
Obama's call to raise taxes on the wealthiest in their first
formal proposal to avert a "fiscal cliff" that could push the
U.S. economy into recession.
After days of stalemate, the Republican offer shows 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.
The White House dismissed the proposal and said it contained
no new ideas. But it could allow negotiators to begin work in
earnest as both sides now have outlined their visions in
concrete terms. Analysts say the talks will have to show
progress this week to ensure that a deal can be signed into law
before the end of the year.
"The American people expect their leaders to find fair
middle ground to address the nation's most pressing challenges,"
House of Representatives Speaker John Boehner of Ohio and
several other top House Republicans wrote in a letter to Obama.
Both the Republican and White House plans would rely on
spending cuts and increased tax revenue to trim budget deficits
by more than $4 trillion over the coming 10 years. According to
the Republicans, their plan would save $240 billion more than
Beyond the headline numbers, the two plans reveal deep
philosophical divisions about how the country should balance tax
increases and spending cuts to put the country's finances on a
Republicans envision $1 trillion more in spending cuts than
Obama has proposed, while Obama wants $800 billion more in tax
increases and $200 billion in measures to boost the sluggish
The Republican proposal would overhaul the complicated U.S.
tax code to raise $800 billion in new revenue. Boehner
tentatively agreed to that much in new tax revenue, presumably
from closing loopholes in deductions, in failed talks with Obama
in the summer of 2011.
Monday's proposal marks the first time his party has floated
a budget plan that departs from the anti-tax stance that has
defined the party for decades.
But the Republicans said they would oppose raising tax rates
on the wealthiest 2 percent of U.S. households, which is a
central element of Obama's proposal.
"Until the Republicans in Congress are willing to get
serious about asking the wealthiest to pay slightly higher tax
rates, we won't be able to achieve a significant, balanced
approach to reduce our deficit," White House communications
director Dan Pfeiffer said in a prepared statement.
The Republican 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.
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
The top Democrats in the House and the Senate said the plan
was unacceptable because it would hurt the middle class while
protecting the wealthy. House Democratic Leader Nancy Pelosi
said she would try to force a vote on Tuesday to raise tax rates
for the wealthiest.
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
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
"A bad deal is worse than no deal at all," she said.
Several defense contractors said their business has already
been hurt by concerns about the looming, across-the-board
spending cuts that will take effect in January absent a deal.
"We are talking a good game, but are still unwilling to park
short-term self-interest," said David Langstaff, chief executive
of engineering firm TASC Inc. "Every trade group, special
interest and corporate lobbyist is up on Capitol Hill clamoring
that Congress solve the problem ... but don't touch my budgets!
We can't have it both ways."