With one eye on the clock and the other on the White House, House Speaker John Boehner introduced a “fiscal cliff” backup plan Tuesday that would only address taxes -- an apparent attempt to pressure President Obama into moving Boehner’s way in deficit-reduction negotiations.
“Plan B” would permanently extend current tax rates on those with annual incomes below $1 million, a concession by Boehner from his earlier opposition to any rate increase. The speaker insisted he was not walking away from the negotiating table, but said he wants to move faster to ensure that most Americans’ taxes won’t rise starting Jan. 1.
Republican leaders insist they have enough votes to pass the measure, which includes an extension of the alternative minimum tax but does nothing to avoid deep across-the-board spending cuts known as the sequester; they plan to bring the bill to the floor this week.
Democrats, though, say it stands no chance of passing the Senate and criticized the proposal as a political tactic.
House Republicans acknowledge a certain inevitability regarding tax increases. “We’re trying to provide the most tax relief to the most Americans,” Oregon Rep. Greg Walden, the incoming chairman of the National Republican Congressional Committee, told RCP, noting his colleagues were unified on this front. If Congress and the White House fail to come up with a deficit-reduction framework by year’s end, current law requires rates to rise for everyone. Boehner’s so-called backup plan not only pushes the White House to act, it also provides his own conference members with some political cover on raising tax rates by allowing them to vote on preventing hikes for most Americans.
Boehner’s announcement came just one day after he again met with Obama at the White House. There, the president walked back a campaign promise of his own by offering to extend current rates on income of $400,000 or below -- a threshold increase from his original insistence on $250,000 for families. That amounted to $1.2 trillion in additional revenue, down from his earlier call for $1.4 trillion, along with $930 billion in spending cuts over the next decade.
The speaker, who most recently offered $1 trillion in new revenue and $1 trillion in spending cuts, said the Republican plan represented a balanced approach and that the president “is not there yet.” He presented the plan to his conference Tuesday morning, and gathered them again in the evening to further discuss the option and the best course of action going forward. Republicans emerged from the meetings with mixed feelings: They wanted to show a unified front, but many expressed concern that the backup plan does not address sequester cuts.
Minnesota Rep. John Kline told reporters after the meeting that Plan B would give Republicans a chance “to vote on the largest tax cut in American history.” But, he said, the “mindless” cuts mandated in the sequester remain “a very, very big deal.” Generally, though, “there is an understanding of the position that we are in.”
Arizona Rep. Jeff Flake, who will join the Senate in January, asserted that Boehner’s plan strengthens the GOP’s hand. “We’d rather separate the revenue side and then get more on the spending side. A lot of us believe we will only get serious talk on the spending once we aren’t considered the party of the 2 percent,” he said, referencing Obama’s original call for tax hikes on the top 2 percent of earners. “I think the big deal comes in January. . . . As soon as we get this revenue part under the table, then we can really negotiate [on spending].” Flake admitted to concern about the sequester, but noted he is more worried about having no cuts at all. Ohio Rep. Pat Tiberi, a member of the tax-writing Ways and Means Committee, told RCP that while he hopes the sequester will be dealt with, Republicans make up just a third of the government.
The White House quickly dismissed Boehner’s proposal and Democratic leaders said they would encourage their members to vote against it. Obama spokesman Jay Carney told reporters that Plan B doesn’t generate enough revenue, doesn’t address spending cuts, and won’t pass the Senate.
As it happens, many prominent Democrats, including House Minority Leader Nancy Pelosi, had previously backed the $1 million income threshold. And Republicans noted that in 2010, the Democratic-controlled Senate passed a similar measure. But Democratic aides say the GOP offer comes too late: The president won re-election in part by campaigning on the $250,000 mark and they insist that more revenue is needed to address the growing deficit. Pelosi explained that her support of the $1 million threshold was designed to call the GOP’s bluff and see if they would support such a rate increase.
“It’s really hard to imagine why they even came up with it, unless they just wanted to prove to their members that unless 218 of them were ready to raise rates, it’s not going to pass. The Democrats are not going to give them that success,” Pelosi said Tuesday.
“They have proven one thing, and it’s a victory for the president: They’re willing to raise rates. Now, the question is: Are 218 Republicans -- that’s what it takes to pass a bill in the House -- are 218 Republicans ready to raise rates? We’ll find out soon.”
The House vote this week would be on a two-part bill that includes one Democratic amendment to extend current law for those making $250,000 and below, and the Republican amendment to extend rates for those making under $1 million. Republicans began drafting the legislation and lobbying members for support Tuesday night.