Boehner’s Plan B fiscal cliff bill pulled amid dissension in GOP caucus

Posted at 6:39 PM, Dec 20, 2012
and last updated 2012-12-20 20:54:11-05

WASHINGTON (CNN) — House Speaker John Boehner’s proposal to avert the looming fiscal cliff’s automatic tax increases has failed to get enough Republican support, throwing yet another monkey wrench into the contentious debate.

Boehner said earlier Thursday that he was confident that his so-called Plan B — which would extend tax cuts that are set to expire at year’s end for most people while allowing rates to increase to 1990s levels on income over $1 million — would pass the House, and in the process put pressure on President Barack Obama and the Democratic-controlled Senate. But that gambit seemed in doubt Thursday, as Republican leaders struggled to get all their members to sign on, knowing the chamber’s Democrats oppose it.

GOP leaders could be seen working the House floor earlier Thursday, trying to convince their party colleagues. Sen. Rob Portman was one of them, telling reporters that he and other Republican senators had been asked to come over and make their pitch.

Around 8 p.m., House Majority Leader Eric Cantor announced that the measure would not go up for a vote as planned. His office later said legislative business was finished for the week and could return to work after Christmas if needed.

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in a statement. “Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff.”

Democratic leaders already had signaled they oppose the so-called Plan B.

What this means next in the fiscal cliff talks is unclear. From here, scenarios range from intensified and ultimately successful talks in the coming days or entrenchment as the fiscal cliff becomes a reality next year, when a new Congress could enter negotiations with Obama.

The Plan B was significant because Republican leaders previously insisted they wouldn’t raise rates on anyone, while Obama pushed for tax rates for households with incomes over $250,000 to return to 1990s levels during his campaign.

Although the House didn’t vote on Boehner’s tax measure, most Republicans did vote together as the House narrowly approved, 215-209, a related measure to alter automatic spending cuts set to kick in next year under the fiscal cliff, replacing cuts to the military with reductions elsewhere. The Congressional Budget Office said this would lead to $217.7 billion in cuts over the next decade, short of the $1.2 trillion in cuts that would go into effect in January if the fiscal cliff isn’t averted.

Moments after this vote, the White House issued a statement indicating it would veto this bill, should it somehow pass the Senate as well.

“For weeks, the White House said that if I moved on rates, that they would make substantial concessions on spending cuts and entitlement reforms,” House Speaker John Boehner said earlier Thursday. “I did my part. They’ve done nothing.”

While the Ohio congressman said Obama seems “unwilling to stand up to his own party on the big issues that face our country,” Democrats say Republican leaders are buckling to their conservative base by backing off as negotiations seemed to be nearing a deal.

White House spokesman Jay Carney called the GOP alternatives “a major step backwards,” claiming they’d lead to extended tax cuts of $50,000 for millionaires. Senate Majority Leader Harry Reid said his chamber won’t even vote on the measures, which he described as “pointless political stunts.”

The war of words notwithstanding, Boehner, Carney and Senate Democratic leaders all said they were ready to talk.

“I remain hopeful,” Boehner said. “Our country has big challenges, and the president and I are going to have to work together to solve those challenges.”

How we got here and what’s next

The possibility of a fiscal cliff — which economists warn will hit the American economy hard — was set in motion two years ago, as a way to force action on the mounting government debt. Negotiations between top Congressional Republicans and Democrats resumed after Obama’s re-election last month as did the barbs from both sides.

Polling has consistently shown most Americans back the president, who insisted that wealthy Americans must pay more, rather than Boehner and his Republican colleagues, who balked at tax rate hikes and demanded spending cuts and entitlement program reforms.

A new CNN/ORC International survey released Thursday showed that just over half of respondents believe Republicans should give up more in any solution and consider the party’s policies too extreme.

The two sides seemingly had made progress on forging a $2 trillion deficit reduction deal that included new revenue sought by Obama and spending cuts and entitlement changes desired by Boehner.

Senior administration officials said Obama and Boehner have not spoken since Monday, when the president made a counterproposal to a Republican offer over the weekend.

The president’s offer set $400,000 as the household income threshold for a tax rate increase. It also included a new formula for the consumer price index applied to benefits for programs such as Social Security, Medicare and Medicaid to protect against inflation, much to the chagrin of some liberals.

The new calculation, called chained CPI, includes assumptions on consumer habits in response to rising prices, such as seeking cheaper alternatives, and would result in smaller benefit increases in future years. Statistics supplied by opponents say the change would mean Social Security recipients would get $6,000 less in benefits over the first 15 years of chained CPI.

Boehner essentially halted negotiations by introducing his Plan B on Tuesday. He described it as a fallback option to prevent a sweeping tax increase when tax cuts dating to President George W. Bush’s administration expire at year’s end. The spending cut vote — similar to one passed by the House last year that went nowhere in the Senate — was added to the docket late, to appeal to conservative legislators upset about backing a tax increase without acting on spending and protecting the military budget.

His reasoning was that the passage of Plan B and the spending bill would put the onus on Obama and Senate Democrats to accept them or offer a compromise.

But the Obama administration has stood firm. Officials have demanded wealthier Americans bear more of a tax burden. As to the House-approved spending cuts bill, White House spokeswoman Amy Brundage dismissed the GOP alternative as “nothing more than a dangerous diversion” for eliminating federal funding by negatively impacting millions of seniors, disabled individuals and poor and at-risk children.

The fiscal cliff talks are keeping Congress in Washington beyond the holidays.

Reid noted that Senate work would be delayed for a memorial service Friday in Washington and the funeral Sunday in Hawaii for Democratic Sen. Daniel Inouye, who died this week. The Senate will return to work on December 27, two days after Christmas, Reid added.

From Deirdre Walsh, Dana Bash and Craig Broffman.
CNN’s Tom Cohen, Joe Sterling and Ted Barrett contributed to this report.
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