December 22, 2012

As Boehner's Plan B fails, choices are compromise or plunge over fiscal cliff

Although Boehner's stature appears diminished because his GOP colleagues didn't support his tax plan, Republicans will ultimately have to agree to some compromise or else across-the-board tax hikes and cuts will go into effect.

By LISA MASCARO and CHRISTI PARSONS Tribune Washington Bureau

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Speaker of the House John Boehner, R-Ohio, joined by House Majority Leader Eric Cantor, R-Va., left, speaks to reporters about the fiscal cliff negotiations at the Capitol in Washington, Friday, Dec. 21, 2012. Hopes for avoiding the "fiscal cliff" that threatens the U.S. economy fell Friday after fighting among congressional Republicans cast doubt on whether any deal reached with President Barack Obama could win approval ahead of automatic tax increases and deep spending cuts kick in Jan. 1. (AP Photo/J. Scott Applewhite)

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Obama must decide if he is willing to make concessions to Republicans to achieve a broader budget deal. Many Republicans have signaled publicly, and privately, that they are willing to raise taxes as part of a deal to cut spending.

In negotiations with Boehner, Obama proposed raising taxes only on household income above $400,000, and cutting the inflation adjustment for Social Security and other government benefits.

The president had campaigned for re-election on keeping tax rates the same for the first $250,000 of income for families and $200,000 for individuals, but raising rates on income above that level. He returned to that stance Friday, when he made a pitch to Republicans to help enact a few stopgap measures. His party's left flank is unlikely to cheer another overture to the GOP.

"The slate is clean," AFL-CIO President Richard Trumka said in a statement, noting that Obama has "no obligation to radical Republicans."

All parties were weighing whether a deal remains within reach, or whether the fiscal cliff would provide strengthened leverage to fight what Boehner has called "trench warfare" into next year.

In a matter of months, a vote will be needed to raise the debt limit so the nation can pay its bills. That has the potential to create a replay of the 2011 battle that led to today's standoff. A new bill to keep the federal government functioning will also be due in the spring.

"Both sides need to recognize what the other can do," said David Winston, a longtime GOP strategist who is close to the House leadership. "Republicans and Democrats, the last thing they want to do is go off the fiscal cliff."

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