Where We Stand on the 'Fiscal Cliff'

With the obvious breakdown in talks between President Obama and Republicans on the “fiscal cliff”, Speaker Boehner is moving forward today with his “Plan B.” The House will vote today on two pieces of legislation: one to extend Bush-era tax rates for everyone earning less than $1 million a year, and a measure to replace the planned Sequestration cuts with a broad range of spending cuts. Further negotiations on the “fiscal cliff” will likely be put off until after Christmas. 

Yesterday, Speaker Boehner stated his intention to bring his “Plan B” to the floor today, giving a strong indication that he has the votes to pass the measures. A number of conservative groups have signaled opposition to Boehner’s plan, but on the Hill it is widely seen as a step in the negotiations, rather than a final settlement. It will be telling how many Republicans vote against Boehner’s plan and whether any Democrats support it. These numbers will reveal a lot about how strong a hand Boehner has within his caucus. 

Reps. Scalise, Chair-elect of the conservative Republican Study Committee, and Mulvaney have offered an alternative amendment to Boehner’s tax plan. It would extend the current tax rates for everyone, regardless of income level. The amendment was submitted last night to the Rules Committee. Watch for whether the amendment is allowed to proceed to the floor and how many votes it attracts. If it doesn’t pass the House, it would be a clear sign that leadership whipped against the proposal. 

Boehner’s “Plan B” goes beyond extending the current tax rates, however. It would provide a permanent fix to the so-called Alternative Minimum Tax, freeze the death tax and permanently set capital gains and dividends tax rates at current levels. It would also replace the immediate, and real, sequestration cuts with a package of tweaks to current entitlement programs, supposedly providing an equivalent level of spending cuts. 

Obama has threatened to veto Boehner’s plan, but that is moot as the measure has no chance of passing the Senate. It likely won’t even be brought up for a vote. The proposal is simply Boehner’s push to put the ball into Obama’s court. The House will likely soon leave DC after the vote for the Christmas holiday. 

The political dance over the past several weeks hasn’t brought the two parties any closer to a deal on the “fiscal cliff.” The odds are increasing that we will go over the cliff, with each side jockeying to not get the brunt of the blame. The media have already cast the Republicans as the villains, should we go over the cliff. “Plan B” is Boehner’s hail-mary pass to avoid that role.