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.
Here is a simple solution, House Republicans pass a tax cut for all and cut federally funded assistance on those that can work. Send to the Senate and the president. Let the Demokrats refuse to sign on. Time to man up.
“This current situation was created by the cowardice of the Republicans themselves. Rather than tackle the tough issues head-on, theyve been content to cut deals; thereby allowing the Democrats to maneuver them into their present position.”
What deals. The Republicans gave the president everything he asked for. I sure would have LOVED to see some real “deals” cut - but there were no deals - just one rubber stamping, sometimes after some showmanship, but always rubber stamping. It didn’t help in the 2012 elections and maybe now some of the conservatives have figured that out.
“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... “
So I guess we can play it safe and, essentially, give the president everything he wants - like we did the last 2 years. Maybe it’s time that we start acting like an opposition party and let the chips fall. You might be surprised to be proven wrong, which is what I think will happen.
“Here is a simple solution, House Republicans pass a tax cut for all and cut federally funded assistance on those that can work. Send to the Senate and the president. Let the Demokrats refuse to sign on. Time to man up.”
EXACTLY!!! But people here are arguing that giving the president virtually all of what he wants (i.e., Plan B), is somehow in our interest.
Your logic is baffling... If Boehner had been able to Twist enough arms to pass “B” - there is NO indication that Harry Reid would bring it up on the Senate floor for a vote (in fact quite the opposit) and obama has said he would not agree to it (”B”)... SO what was the purpose - just to demonstrate that Republicans would cave on new taxes ...
I hope obama does take it over the Cliff - all the while believing he would quickly introduce a bill to get what he wants and believing the Repugs would have to go along -— THEN the Tea Party Conservatives and other Conservatives tell him to SHOVE IT... let obama squirm and finally - actually compromise on spending ... or do some other rash crap like use Executive Orders to piss off the nation.
“Your logic is baffling... If Boehner had been able to Twist enough arms to pass B - there is NO indication that Harry Reid would bring it up on the Senate floor for a vote (in fact quite the opposit) and obama has said he would not agree to it (B)... SO what was the purpose - just to demonstrate that Republicans would cave on new taxes”
You’re right. Boener would have split the Republican caucus in half by winning that vote, leaving the Tea Party rot.
...and what for? Taxes would STILL go up on Jan 1, and the Republicans would still be forced to support Obama’s tax increases on $250k minimum.
Boener’s strategy made ZERO SENSE - and telling him to take a hike leaves the Tea Party intact to keep fighting, and doesn’t do anything, at all, to change the game on the ground.
To show voters that the GOP will vote protect them from higher taxes on Jan1, which they obviously didnt do last night as they are going up.
This defeat sends a message that they will support higher taxes on the 99.8% (nearly all voters) out of spite that the 0.2% will get the automatic tax increases. In fact a few honest freepers HERE have told me this is exactly what they themselves want to happen.
This only works for the positive if Obama gets the blame.
If the GOP gets the blame then we probably will haveSpeaker Pelosi in 2015 taking all our guns away, with the higher taxes, and DOMA repealed, .
In MSM/Republican parlance: Deal = Cave
“To show voters that the GOP will vote protect them from higher taxes on Jan1...”
Actually, no. The president and the dems will simply claim that it was a STUNT, with the Republicans knowing full-well that it would never become law.
That’s why it’s futile trying to play by his rules. The markers are clear - either we give Obama EVERYTHING he wants, or taxes go up a bit on Jan 1 - there is NO middle ground.
As to how it’s perceived, like I said, if we don’t give Obama EXACTLY what he wants, he’ll call it a stunt and the political damage will be the same as it is now. No one is going to blame Obama...but the Republican Party will be cleanly severed from the Tea Party, and that will pretty much end any opposition to the Democrats for at least a generation.
The way the Republicans actually WIN this issue is to simply let the rates go up as planned in January, and then, and ONLY then, start the negotiations.
The Republicans will be SHOCKED at just how receptive the Democrats are to negotiations, once they realize they can’t just be rolled over. The Democrats fear these across-the-board tax increases MUCH, MUCH MORE than the Republicans. The taxes will SLAM their liberal base in the Northeast in the West Coast. They will also add millions and millions to the tax roles (i.e., the ones that dropped off due to the Bush cuts). They will hear high-hell from their voters.
...and meanwhile the Republicans will also hear some complaints, but their voters will not be hit quite as hard. And the Republicans have options that don’t require a tax increase (i.e., a clean extension), or maybe let Obama have his increase in exchange for real spending cuts and entitlement reform. That’s how negotiations should be handled.
If it had passed it would have given Boehner the political capital to emphasize how often Dems had said they wanted a "millionaire's tax" which he could manage to deliver, not one on small businesses making $250,000 and this would have brought pressure on Reid and Pelosi regardless of what Reid said yesterday. It would also have put pressure on Obama to lower his demands on spending, seeing that Boehner was able to get his vote through.
Too bad...we'll never know.
Actually I really appreciate your predictions in that last comment, although I remain skeptical.
The results of the blame game will determine which side caves. Let the games begin!
You seem to bathe in wishful thinking ... Reid and Pelosi do not respond to Republican Pressure and NEVER will unless and until the Democrats and obama lose control of the media- which they OWN 95%
And - who in America would come to know about any Republican action? ... The ONM - the obama News Media controlled the November Elections - controlled every single piece of significant information seen by a huge overwhelming percentage of the American public in the run up to the elections ... This obama propaganda media would twist every action of the Republican House into tax hikes - even when they are the opposite. Republicans are going to be slapped with the FAULT in this ‘Cliff’ fiasco and nothing they do will be seen in the true light ... So Republicans should just do the right thing and SAY NO to TAXES and YES TO SPENDING CUTS.
You don't seem to get it. If the bill passed it would have shown that the GOP House has strength. This would have filtered through to the media.
Yes, of course the MSM backs Obama, but instead of the whip-lashing the MSM is giving the House today the GOP could have been trumpeting the message that Pelosi had earlier wanted only a "millionaire's tax", FOX would have backed them up and the story would have filtered through.
This would have been dominating the headlines today instead of the current junk. This would have strengthened Boehner's hand to get Obama to move further on spending cuts.
Obama bowed to pressure and extended the Bush tax cuts 2 years ago. We lost our chance to pressure him today to move our way on taxes and cuts. He doesn't get everything he wants regardless of what the MSM wants you to think.
Well their luck has to change doesnt it?
I mean every one of these similar stands ended with an O victory, and House humiliating defeat?:
1) Budget deal 2011, keyword ‘shutitdown’
2) Debt limit act 2011, keyword ‘default’
3) FICA tax battle, keyword ‘payfortaxcuts’
#4 ??? Keyword ‘gooffthecliff’(go off the cliff)
Maybe the sun will just stop in the sky..
“This would have filtered through to the media.” No - it would not have - not in any truthful manner. Did you listen to Rush today? He read the White House posted position on Plan B - off the WH website... about five major TOTAL lies about what PLAN B entailed.. Total distortions... and these will be the talking points for the obama owned media.
Where did you buy your Rose Colored Glasses?
But every time we do ANYTHING of significance, it DOES get reported.
Then FOX picks it up, pushes it, and the MSM has to backtrack on what they're trying to do.
Do you think Benghazi would have lasted this long without that happening? Do you think the Rice nomination would have been pulled?
The coverage would be far, far different today if the House had shown unity.
“Well their luck has to change doesnt it?”
Yep, that’s it. They have to go to wall. Until now Boener simply told the Tea Party to bend over and take it - since he (likely) PROMISED them that they’d defeat Obama this year, as long as they behaved (i.e., capitulated). They did, and got NOTHING in return. The Tea Party, obviously, told Boener to shove it this week, which is why his leadership failed.
They are pissed and they owe him nothing. That’s why I’m (finally) optimistic.
“The results of the blame game will determine which side caves.”
Maybe, maybe not, this time. The Tea Party has never liked Boener, but they did what they were told in the interest of getting Obama out. IT DIDN’T WORK. They owe Boener NOTHING now...it’s their turn to play ball.
This may get interesting.
I think your appraisal of what they are thinking rings with truth. And they lost seats too, that must hurt.
But they did pass 33 symbolic repeals of O care the past session, and a Budget control act with delayed budget cuts that they want to repeal. Obama isnt going for symbolism, he is going for the kill and a filibuster proof Dem congress his last two years.
It will not just get interesting but it will be the show of a lifetime.
No one will challenge Boner because they now know that Pelosi will take the House back in 2015(2014) either way and they figure that better Bohner than them on the bridge to be the goat.,
With Bone they can say “I knew .....”. If it is them then they will be universally hated.
Public awareness of the Bengazi tragedy and fiasco (as an example) has been effectively minimized to near non news by the MSN who pay only occasional lip service to the incident. And then the MSN often broadcasts some covering blather for obama. While FoxNews and Conservative Talk Radio do a good job of covering all the news and have kept the Bengazi foul up alive, the greater majority of Americans are not engaged with Bengazi and are indifferent or side with obama. Please note 65.6 million voted for obama and 60.8 million voted for Romney. About 50 million adult Americans DID NOT VOTE AT ALL... So we have nearly 66 million people who are not going to turn againt obama and about 50 million people who don’t seem to give a damn. So there are about 106 million adult Americans who will not be outraged by Bengazi and up to about 61 million who will remain upset at obama’s actions surrounding the Bengazi incident... WE ARE SIMPLY OUTNUMBERED - largely because the MSM will not report the real news and actively downplay any negatives against obama. You are beating a dead horse ...