Skip to comments.GOP's Plan B Would End Paralyzing Uncertainty Over Tax Rates And Boost Economic Growth
Posted on 12/21/2012 6:28:08 AM PST by Kaslin
WASHINGTON - The dizzying, budgetary roller coaster ride careened closer to the "fiscal cliff" this week when House Speaker John Boehner tossed a new Plan B into negotiations with the White House.
Just when it seemed Boehner and President Obama were nearing a deal, the speaker changed course, voicing doubts a full package could be worked out in time before the January 1 deadline.
That's when a combustible combination of higher taxes and sweeping automatic defense and domestic spending cuts will send the economy into a recession, economists say.
Boehner's eleventh hour rescue plan would permanently extend virtually all of the tax cuts enacted under President George W. Bush for all households under $1 million. That includes reigning in the punishing alternative minimum tax and retaining the lower tax rate on inherited estates.
"I believe it's important we protect as many American taxpayers as we can. And our Plan B would protect American taxpayers who make a million dollars or less and have all of their current rates extended," Boehner told reporters after closed door meetings with his House GOP caucus.
Was this an insurance policy move by Boehner and his leaders to blunt a likely White House offensive that would blame Republicans if a compromise isn't reached before year's end? Or a daring move to demonstrate his political strength in the GOP House to extract deeper concessions from Obama?
To many House Republican veterans who have fought over countless negotiated legislative deals before, he was playing both strategies at once.
It was a high wire act by a cunning legislative strategist who has gone toe-to-toe with Obama many times before, only to walk away from a deal his party could not accept. He believes a deal can still be worked out, but that the White House needs to be convinced that only a tougher package can win House passage -- one with no increase in tax rates below $1 million at a time when the economy remains sluggish and full time jobs are in short supply.
Boehner pulled out his back-up plan at mid-week after both sides had moved the needle toward a deal. But then the talks stalled over deeper spending cuts the speaker sought, and other complicated tax matters. GOP leaders feared there was little or no time to construct a full-blown trillion dollar-plus deal over a raft of fiendishly complex issues that cannot be fully resolved in less than 12 days.
Ordinarily, fiscal fights take months to wind their way through a fierce gantlet of committees, subcommittees, countless votes, and endless conference committee deal-making before a bill reaches the floor for final passage.
In this case, the White House was attempting to by-pass much of that process in the belief they could bully Republicans into caving in for fear of suffering the public's rath against the wave of higher taxes that would result if no agreement is reached. That has been Boehner's fear from the very beginning of the negotiations.
By mid-week, he was preparing to play the tactical card he had hidden up his sleeve: House Republicans would show their resolve by making the expiring Bush tax cuts permanent, avoiding the worst of the fiscal cliff, postponing action on spending, then send it to the Senate, daring the Democrats to kill it and push the economy over the edge.
"Then, the president will have a decision to make," Boehner said. "He can call on Senate Democrats to pass that bill, or he can be responsible for the largest tax increase in history."
Senate Majority Leader Harry Reid said the bill could not pass the Senate and swore to block it's consideration. The White House, caught off guard, called it a non-starter, but the talks have clearly stalled.
As many as 10 or more House conservatives opposed the bill's top tax rate increase on millionaires. The Heritage Foundation also opposed it on those grounds, but Grover Norquist, the hardcore anti- tax crusader, supported Plan B, saying it didn't violate his anti-tax pledge that almost all GOP lawmakers signed.
Boehner has made significant concessions in the past week or so in negotiations with Obama, and so has the president. Obama gave up his long-standing demand to raise the top tax rate to nearly 40 percent for people who earn more than $250,000 a year, limiting it to households earning more than $400,000.
Boehner held fast to his opposition to all tax rate hikes that would hit small business employers and investors, but agreed to applying the highest rate to those earning over $1 million. In fact, existing tax deductions and exemptions would bring the effective rate well below that top levy for many if not most millionaires anyway.
The White House also gave in to Boehner's key demand on entitlements, allowing a less-generous inflation formula on cost-of- living adjustments for Social Security benefits, and agreed to end the 2 percent payroll tax cut that affects virtually every worker in the country.
In the final analysis, Boehner was sending a signal that the House Republicans would not be bullied into accepting Obama's higher taxes when the economy was limping at a less than 2 percent average annual rate that was expected to decline in the fourth quarter.
Plan B would not only avoid tumbling over the fiscal cliff that every economist says will drive the economy back into a recession, it would erase the pervasive uncertainty that has retarded economic growth over the last four years.
Businesses would know that their tax rates would not change next year, emboldening them to make investments and other plant expansion plans that have been on hold throughout Obama's first term.
It would also buy needed time for Congress to reform the difficult revenue reform plans pushed by Republicans to cleanse the tax code of inefficient, special interest tax loopholes and other corporate welfare provisions. That will not only raise tax revenues, reducing the deficit, it will spur stronger economic growth -- the pivotal fiscal ingredient that has long been missing from this debate.
Too late for doing the Boener’s dirty work, the Tea Party, RIGHTLY, will not permit the president to simply raise taxes at will on the class of people he’s chosen to go after.
It’s time for the president to give something back. If not, let’s go off the cliff together and have EVERYONE, including the president’s people, feel the pain of a tax increase.
Now we have propaganda from the liberal Republicans ... when will they every ‘GET IT’. Republicans are not elected to GO ALONG with the President - especially this insane nut of a president. History has shown (very recent history has reinforced) Democrats will not Go Along with a Republican President - they torpedo everything a Republican President does from day one - until the last day in office...
Wienies all ...
I tend to side with Rush...Obama wants to go off the cliff so he can come riding his unicorn to the rescue tossing us all goobermint skittles for a season. Bad Republicanz
The problem was that opposition to this was based on a big lie, and that HUGE lie was that this B proposal raised anyone’s taxes, all it did was protect 99.8% ( all of us) from the comming January 1 tax increases.
I am pretty sure that everyone who claimed this B bill was a tax increase already knew that all the taxes go up January 1, so they knew what they were posting was not true.
>>> It would also buy needed time for Congress to reform the difficult revenue reform plans pushed by Republicans to cleanse the tax code of inefficient, special interest tax loopholes and other corporate welfare provisions. <<<<
Who else believes this view? The chance of it happening in the normal course of day is nil.
A hard crash might be just the ticket to jolt Congress (and public) back to their senses.
In fact about 1 in 50 here against it did actually admit to me that this is what they really wanted, our taxes to go up to teach voters a lesson.
But most just repeated the big lie that B raised taxes, which will be proved false on January 1.
A hard crash might be just the ticket to jolt Congress (and public) back to their senses.
There won’t be a hard crash now. Taxes will go up for a month or two and then Barry will get his Obama Tax Cuts. The only permanent cuts will be defense. Barry will continue his spending and if the debt ceiling gets in the way he will just EO his way around it.
I don’t really understand why conservatives are all for giving the kenyan everything he wants without a fight. Just shouting CUT SPENDING clearly isn’t working and will just lead to Speaker Pelosi. Is that what you want?
And if the GOP gives in, in a few months the need to boost revenue will arise again. Then it won’t be the 1 million crowd alone, it will be the half million, and so on until all taxes are higher for all working people. It’s how the rats have been playing this: incrementally.
Why play that game? Stand up and say no more. And no matter how loud the GOP shouts cut spending, the rats won’t do it. They will continue to play this game because, so far, the GOP has been play to their tune.
Yes and if the GOP hadn’t caved and voted for this carpola last year we wouldn’t be at the edge of a fiscal cliff. Its time to clean house and get rid of Tammy Faye and his merry band of RINO’s.
The Republicans need to remember to stand up and say that they were elected to go to Washington and stand up for their point of view no matter who won the national election. There is no point in having power if you don’t know how to weild it. The GOP controls the purse strings and they are not using this power effectively.
Whether you are right or now matters little ... obama was/is NOT going to agree to this - even if passed by the House... and Harry Reid is not going to have it brought up even if passed...
This current situation was created by the cowardice of the Republicans themselves. Rather than tackle the tough issues head-on, they’ve been content to cut deals; thereby allowing the Democrats to maneuver them into their present position. I cry for productive, law-abiding Americans; but I don’t cry for the Republican Party.
GOP’s Plan B? You mean San Fran Nan’s Plan B?
It isn’t going to do anything but re-arrange the deck chairs on the economic Titanic of our country’s imminent collapse under historically unheard-of debt and unsustainable monetary policy.
Just more game-playing by the clowns we keep sending to represent us.
I am glad you brought that up. The Marxists won a big one last night defeating this B bill, with help from the ‘big lie’
Dems get more taxes and Republicans get the blame (at least that is how these plays have always gone in the past).
If this play leads to Obama caving next year I will be delighted to admit that I was wrong, but if not...
Agreed. It’s time to take the medicine. Band-aids aren’t a legitimate treatment for cancer.
If you ever think GOP strategy is going to get us, esp. conservatives, any credits to win public over, it’s crazier than any plan B or XYZ.
To get along with whatever crazy plan(s) is not going to prevent a ‘speaker Pelosi’.
“The GOP controls the purse strings and they are not using this power effectively.”
That’s the understatement of the year. They ARE NOT using that power AT ALL. They are completely controlled by their sissy-advisors that tell them that they will lose big, in any confrontation with the president.
Voting for Dems, Dem-Lites, and Obama was what the public wanted.
Now is the time to pay for it.
“In fact about 1 in 50 here against it did actually admit to me that this is what they really wanted, our taxes to go up to teach voters a lesson.
But most just repeated the big lie that B raised taxes, which will be proved false on January 1. “
The problem with Plan B was that it not only increased taxes on “the rich” - which means NO ADDITIONAL REVENUE, as they’ll simply get around it. More likely it would be a revenue loser - as they cut back even from where they are today.
There were NO SPENDING CUTS either in Plan B. So what was the point of it, for conservatives? They know FULL WELL that Obama and the Dems in Congress will have the wealthy Northeastern Liberals screaming like hell at him if their tax rates go up (and you do not want your staff to be on the receiving end of those phone calls). Obama simply cannot afford to let that stand and those lower rates will be protected at ALL COSTS, even if that means that “the rich” are also protected.
Just watch - the Dems will scream uncle long before Republican voters.
The problem is we conservatives have been so NEUTERED by this Congress that we don’t have the guts to do anything. Things would be a LOT DIFFERENT today had Newt stayed as House Speaker - he, at least, was willing to go to the mat against Clinton, even if he later backed off somewhat. This bunch just rubber-stamps Obama and people here, now, seem to actually want just that.