Boehner's Plan B for fiscal cliff meets resistence

2:34 PM, Dec 18, 2012   |    comments
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House Speaker John Boehner announced Tuesday that he is moving to a Plan B to solve the fiscal cliff issue and he will put a bill on the floor that increases taxes for people whose incomes are more than $1 million. (Photo by Alex Wong/Getty Images)

WASHINGTON - With the "fiscal cliff" looming, House Speaker John Boehner presented a plan to fellow GOP lawmakers on Tuesday to move forward with a bill that will raise tax rates for Americans making more than $1 million if they fail to reach a final deal with President Obama, but the White House doesn't appear to be buying in.

"For weeks, Senate Republicans - and a growing number of you - have been pushing for us to pivot to a 'Plan B,'" Boehner told House Republicans. "I think there's a better way. But the White House just can't seem to bring itself to agree to a 'balanced' approach, and time is running short."

Boehner said his Plan B does not mean he has given up on negotiations with the White House, but the speaker believes that the threat of current tax rates expiring rising for all Americans is too great not to have a backup plan.

Under the speaker's 'modified Plan B' scenario, the U.S. House would take up a bill to extend the expiring George W. Bush-era tax cuts for all but the top 2% of earners. However, it would not turn off the looming "sequester," a painful $1.2 trillion in automatic spending cuts that will begin Jan. 1. The speaker also said proposals addressing the expiring Alternative Minimum Tax patch and the estate tax could be included in his package that could be on the floor as early as Thursday.

Senate Majority Leader Harry Reid, D-Nev., made it immediately clear that the Democratic-controlled Senate would not take up the speaker's alternative proposal. "Now is the time to show leadership, not kick the can down the road," Reid said.

Late Tuesday morning, White House Press Secretray Jay Carney issued this statement:

"The President has put a balanced, reasonable proposal on the table that achieves significant deficit reduction and reflects real compromise by meeting the Republicans halfway on revenue and more than halfway on spending from where each side started. That is the essence of compromise. The parameters of a deal are clear, and the President is willing to continue to work with Republicans to reach a bipartisan solution that averts the fiscal cliff, protects the middle class, helps the economy, and puts our nation on a fiscally sustainable path. But he is not willing to accept a deal that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors. The Speaker's "Plan B" approach doesn't meet this test because it can't pass the Senate and therefore will not protect middle class families, and does little to address our fiscal challenges with zero spending cuts. The President is hopeful that both sides can work out remaining differences and reach a solution so we don't miss the opportunity in front of us today."

Boehner's plan also met with resistance from Republicans who oppose any deal to raise taxes. "I'm a hell no," said Rep. Raul Labrador, R-Idaho, a conservative freshman.

The most recent "fiscal cliff" offer came late Monday from the White House, which included $1.2 trillion in revenues and $1.2 trillion in spending cuts following an offer by Boehner for $1 trillion in revenues for $1 trillion in spending cuts. The offer included concessions from the president on tax rates beginning at incomes over $400,000 for couples, a change from his campaign pledge to let the tax cuts expire on those making more than $250,000.

The speaker rejected the offer because Republicans believe the White House uses budgetary gimmicks to account for their $1.2 trillion in spending cuts. He told reporters that a "balanced" deal will likely have to include equal tax raises and spending cuts. "Most people would agree that that's balanced," Boehner said. The speaker and the president also remain at odds over raising the debt ceiling, the nation's borrowing authority, as part of the deal and what entitlement cuts to include.

Republicans want to change the way cost-of-living adjustments are calculated for Social Security beneficiaries, but Boehner softened his tone Thursday on GOP proposals to raise the elibigility age for Medicare. "I don't believe it's an issue that has to be dealt with between now and the end of the year," he said.

White House negotiator Rob Nabors briefed House Democrats this morning on the White House offer, which includes extensions for unemployment benefits but no proposal to continue the 2% payroll tax holiday, which is likely to be met with resistance from some Democratic lawmakers. Obama also continues to seek additional stimulus spending for infrastructure projects that Democrats support but Republicans oppose.

Despite the lingering differences, the president and the speaker have made significant progress towards reaching a final deal, and lawmakers on both sides were optimistic Tuesday that the "fiscal cliff" could be avoided.

 "I think that the best Christmas gift that we could give America is an agreement," said Rep. Cathy McMorris Rodgers, R-Wash, "I'm confident that we can get it done. This is our moment. And this is our moment to do what's good and right for America."

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