December 19, 2012

Boehner's alternate tax plan stalls 'cliff' talks

A day after both sides agree on key issues, the Speaker angers Democrats with a new proposal.

The Associated Press

WASHINGTON - Just two weeks from an economy-threatening deadline, fiscal cliff talks hit a lull Tuesday as House Speaker John Boehner announced that Republicans would march ahead with their own tax plan on a separate track from the one he's been pursuing with President Barack Obama.

Harry Reid
click image to enlarge

Senate Majority Leader Harry Reid of Nevada, who spoke following a Democratic policy luncheon Tuesday, says a “Plan B” tax proposal from Republicans “will not pass the Senate.”

The Associated Press

Related headlines

The White House and leading congressional Democrats immediately rejected Boehner's "Plan B," which would extend soon-to-expire Bush-era tax cuts for everyone making less than $1 million but would not address huge across-the-board spending cuts that are set to strike the Pentagon and domestic programs next year.

"Everyone should understand Boehner's proposal will not pass the Senate," said Senate Majority Leader Harry Reid, D-Nev.

Boehner's surprise move came after significant progress over the past several days in talks with Obama -- talks that produced movement on tax rate hikes that have proven deeply unsettling to GOP conservatives and on cuts to Social Security benefits that have incensed liberal Democrats.

Just Monday, Obama offered concessions, including a plan to raise top tax rates on households earning more than $400,000 instead of the $250,000 threshold he had campaigned on. And the two sides had inched closer on the total amount of tax revenue required to seal the agreement. Obama now would settle for $1.2 trillion over the coming decade while Boehner is offering $1 trillion.

By contrast, protecting income below $1 million from a hike in the top tax rate from 35 percent to 39.6 percent would raise only $269 billion over the coming decade.

But the outlines of a possible Obama-Boehner agreement appeared to have shaky support at best from Boehner's leadership team and outright opposition from key Republicans like vice presidential nominee Paul Ryan, R-Wis., a House GOP aide said, speaking on a condition of anonymity.

Though Obama spokesman Jay Carney had nothing good to say about Boehner's new option, he said, "The president is willing to continue to work with Republicans" toward a broader agreement.

The narrower Plan B faced plenty of opposition. Democrats announced they would oppose it, and many conservative Republicans continued to resist any vote that might be interpreted as raising taxes.

Republicans were refining the measure Tuesday in hopes of building support among the GOP rank and file, but passing the measure exclusively with GOP votes could prove difficult.

"I think it's a terrible idea," said Rep. Raul Labrador, R-Idaho. "For a lot of reasons."

Republicans noted that top Democrats like Minority Leader Nancy Pelosi of California and Sen. Charles Schumer of New York have in the recent past supported the million-dollar threshold for rates hikes. "We've had an election on the President's tax plan, the President won, and Republicans can't turn the clock back," said Schumer spokesman Brian Fallon.

Boehner's back-up plan would extend current income tax rates except for income exceeding $1 million, set a 20 percent tax rate on capital gains and dividend income for income over $1 million instead of 15 percent now, and retain current rules regarding the estate tax instead of tighter parameters sought by Obama.

It would also prevent an expansion of the alternative minimum tax that would otherwise hit 28 million middle- and upper-class Americans with an average $3,700 increase on their 2012 tax returns.

Democrats said Boehner's move made it clear he was abandoning efforts to reach an agreement with Obama -- much as he quit talks with Obama 18 months ago.

"Plan B is yet another example of House Republicans walking away from negotiations," said Rep. Chris Van Hollen, D-Md.

At the White House, officials remained cautiously optimistic that the talks could get back on track despite Boehner's maneuvering.

 

Were you interviewed for this story? If so, please fill out our accuracy form

Send question/comment to the editors




Further Discussion

Here at PressHerald.com we value our readers and are committed to growing our community by encouraging you to add to the discussion. To ensure conscientious dialogue we have implemented a strict no-bullying policy. To participate, you must follow our Terms of Use.

Questions about the article? Add them below and we’ll try to answer them or do a follow-up post as soon as we can. Technical problems? Email them to us with an exact description of the problem. Make sure to include:
  • Type of computer or mobile device your are using
  • Exact operating system and browser you are viewing the site on (TIP: You can easily determine your operating system here.)