Fiscal Cliff

Boehner's Fiscal Cliff Plan B Fails. Now What?

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It was supposed to be a demonstration of strength. It turned out to be a demonstration of weakness.

When Republican House Majority Leader John Boehner informed the White House that he'd be holding a vote on "Plan B," a bill to extend the Bush tax cuts for all income under $1 million, his goal was not for the plan to become law. It was to put President Obama in a more difficult spot: It would demonstrate Boehner's control over his caucus, pushing through a vote on a tax increase for the highest earners. And it would give Republicans a way to blame Democrats should no deal be reached: Republicans could say they had voted to avert a tax hike on most Americans, and increase tax rates on high incomes — and Democrats had refused to support it.

That was the plan, anyway. But enough of Boehner's colleagues in the House refused to go along that it didn't come together. At the last minute on Thursday night, Boehner canceled the vote. He just didn't have the support he needed. What the top House Republican ended up proving was that he wasn't in control.

What explains the refusal to go along with the GOP Speaker? As far as I can tell, it's pretty straightforward: There were enough House Republicans who really didn't want to vote for any bill that would allow tax rates to rise on anyone, even, and perhaps especially, a bill that wasn't actually intended to become law. 

Sounds simple enough, right? But the unique circumstances of the fiscal cliff make it a little more complicated. Now that Plan B has failed, we might well go over the fiscal cliff,  thus allowing the Bush tax cuts to expire. That will mean higher tax rates on everyone, at least until Congress inevitably passes a bill to reinstate the Bush tax cuts for everyone below $250,000.

In other words, Republicans were so opposed to casting a strategic vote raising taxes on anyone that they instead pursued a strategy that may have the effect of allowing taxes to go up on everyone, or at least those making more than $250,000. 

So what happens now?

Two possibilities remain. One is that we go over the fiscal cliff, and then terms of the fight change permanently: Income taxes go up on everyone, there's no alternative minimum tax (AMT) patch or doc fix, and some of the fiscal cliff spending reductions start to kick in. 

What will Republicans do then? At Forbes, Avik Roy suggests that the GOP could bargain from there for a better deal, including some sort of entitlement reform. I'm skeptical. This is, after all, the same GOP that just voted against a strategic tax hike that wasn't going to become law — despite the fact that it might have given them leverage to actually prevent real tax hikes from happening. Once taxes go up, how likely is it that those same Republicans will then refuse to vote for a package that reduces tax rates on earnings under $250,000? 

But going over the fiscal cliff is not quite inevitable. Not yet. Boehner can still cut a deal with the White House — and he doesn't even need unified Republican support to do it. If Boehner and Obama agree on a deal, then Boehner can pass it on a bipartisan basis with a large number of votes from House Democrats. And as The Examiner's Philip Klein points out, there's precedent for this approach:

Keep in mind that during last year's fights over the government shutdown and raising the debt ceiling, Boehner wasn't able to unify his members, so he cut a deal with President Obama that passed the House with the help of Democrats. We don't know exactly how many votes Boehner was short tonight, but we do know that he had little margin for error going in — he could only lose 23 Republicans, assuming Democrats held firm. Were Boehner instead to cut a deal with Obama that could attract Democratic support, it would give him a greater cushion. Going back to last year, 59 Republicans voted against the deal to avert the government shutdown and 66 voted against the deal to raise the debt limit — and yet both measures sailed through comfortably with Democratic support.

It was always clear that any deal would be a last-minute deal. That's still the case. Indeed, Boehner may now feel a sense of urgency to make a last minute deal the only way that seems plausible at this point — by going forward with a bill that lots of House Democrats will also support. But part of the question now is whether Boehner actually wants to make a deal that relies heavily on Democratic votes, and which could help cost him his speakership, which is up for a vote at the beginning of next year. Boehner already demonstrated his weakness with Plan B. Is he willing to do it again? 

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  1. Suderman, since I’ve got you here, what are your issues with Avik S. A. Roy’s account of last night?

  2. Jump, you fuckers!

    1. Unfortunately, what is going to happen is that Republicans will take the blame for going over the cliff and Obama will get credit for passing tax cuts for the middle class.

      1. Yes. And what they are going to do was wait until AFTER the fiscal cliff when actual people see their taxes go up on their first pay check.

        And when that happens the R’s wll have NO leverage AT ALL. They will have constitutents screaming into their phones.

        And they will end up with a much worse deal as a result.

        1. No leverage?

          They control the House, they have all the leverage.

          1. Do do what? Wait until after January, and then refuse to pass any tax cuts, after the tax rates have already gone up?

            In this case, a vote against “Plan B” is a vote to raise taxes on everyone. it’s not a vote to keep taxes the way they are.

            There is no power in the universe that can prevent taxes from going up on those making over $1 M.

            1. Its simple, in January, the House passes a budget with dramatically reduced spending and they can restore the tax cuts too, if they want.

              If the senate doesnt pass it, or the president vetos it, shut the fucker down. Nothing passes until it does.

              But the GOP would have to grow some balls.

              1. And the D’s will pass their own bill that reduces taxes for almost everyone, and then the R’s will be holding middle class tax cuts hostage to tax cuts for the wealthy.

                It’s a losing proposition. Hundreds of millions of people are going to see their tax rates go up, and they aren’t going to give a shit about whether rich people get tax cuts too.

      2. So? What difference does it make who gets credit/takes blame?

        1. Randian is outing himself as a team red member.

          1. That’s the dumbest thing I’ve heard all week, and I spent some time trolling YouTube this week.

            1. This is what TEAM ORANGE partisans really think.

            2. Adjustment due on sarcasm meter?

        2. Because it lets the Left continue its Two Minutes against the Republicans, and I’m not a fan of a One-Party State.

          1. I’m not a fan of a One-Party State

            Are you a fan of a nominally two-party state that continually fucks over everyone in the name of being contrarian?

            1. I can’t speak for Randian but why would the former imply the latter?

              1. It doesn’t, and I didn’t say it did. The latter is what we have right now, my question was to gauge his feelings towards the current system.

  3. No, fuck you, cut spending.

    1. That’s a nice sentiment, but it isn’t in the cards.

      Lower spending is MORE IMPORTANT than lower taxes. The only way we’re going to get lower spending is by trading higher tax rates for it.

      And that is a way saner thing to do than trading more spending for lower taxes, which is what Republicans have traditionally done. The only way R’s going negotiate NO tax increases is by giving Obama his extra spending on welfare and green energy.

      1. Lower spending is MORE IMPORTANT than lower taxes.

        Of course not, those taxes aren’t your that are guaranteed to go up. I like how you want to piss away my money Hazel.

        Cute trick advocating collectivizing risk then turning around and advocating lower spending. Unfortunately, you find yourself in the same boat with the electorate when trying reduce spending on entitlements when they are already locked in.

        It’s a fool’s errand any way you slice it.

      2. Lower spending is MORE IMPORTANT than lower taxes. The only way we’re going to get lower spending is by trading higher tax rates for it.

        Except they won’t. They will take the extra taxes and spend it as well. They will NEVER voluntarily cut spending. So I see no reason to give them more of my money to piss away.

  4. Shitty people making stupid decisions is really no way to run a country.

    1. Historically, it seems to be pretty much our only option.

  5. Randian,

    A couple issues: He’s right that a fiscal consolidation is in order. And a pure cliff jump would do it. But…

    1) …if it worked as deficit reduction, it would do so in a particularly awkward way, not only raising income tax rates but cutting physician reimbursements in Medicare by 25-30% and forgoing an AMT patch, which sets the stage for long-term AMT creep, which probably isn’t politically sustainable.

    2) …it wouldn’t actually work, because as soon as we go over the cliff, Congress is almost certain to reinstate Bush tax rates for most everyone and override a lot of the spending cuts.

    3) …he seems to think that Republicans, who did not want their names on a tax increase for millionaires that was never intended to become law (a tax “hike” that Grover Norquist gave them a pass on), will hold off on voting for a tax reduction once rates go up, and use their votes to negotiate a better deal. This does not seem plausible to me.

    1. 2) …it wouldn’t actually work, because as soon as we go over the cliff, Congress is almost certain to reinstate Bush tax rates for most everyone and override a lot of the spending cuts.

      You are definitely right about that.

      1. I think he is wrong on that.

        I dont think the tax cuts for a subset with get reinstated. All or nothing.

        1. Are you kidding? What Republican is going to vote against a tax cut?

          1. Apparently enough to prevent Plan B from passing.

            1. Because the rates haven’t gone up yet. They would have been voting “for” a “tax increase”.

              1. Its semantics, its the same fucking thing.

                1. Not to the public, rob. That’s the problem.

                  1. I am the public.

                    1. No, you aren’t.

                      “Republicans Failed to Work With Obama. Now Your Taxes Are Going Up.”

                      That’s going to be the editorial headlines in 99% of media outlets, new or old.

                    2. No, you aren’t.

                      Yes I am. As Im not an elected official, that makes me the public.

                    3. You know what I mean.

                      You can try to bail out political ignorance, but you may has well be using a teaspoon on Lake Superior.

    2. If a $1 million cap wont pass, what makes you think a $250K one will?

      1. Because after the ‘jump’, tax rates will be higher, which means the Ds can package the cap as a “tax cut for all but the wealthiest”

        1. Boehner botched it by trying to play too nice with the Dems.

          He should have just put up a clean extension of the current rates for everyone, and gone home.

          Then it becomes the Dems are holding tax cuts for the middle class hostage to their lust for higher rates on the wealthy.

          Force the Dems into an up or down vote on tax cuts for everyone or no one, and see what they do. At that point, it gets to be really hard to blame the Repubs because the Dems refuse to extend the current rates for the middle class unless they get higher rates for the rich.

          But no, the inept Boehner just had to try to play nice with people who are negotiating in bad faith. What a tool.

          1. That’s what they should have done. Granted, the Dems and most of the media would be desparately spinning to destroy any impression that it is the Dems intransigience on raising the upper income rate. At some point the GOP has to realize that rhetoric aspect of the game is rigged against them and stop giving a shit about it.

    3. 2) …it wouldn’t actually work, because as soon as we go over the cliff, Congress is almost certain to reinstate Bush tax rates for most everyone and override a lot of the spending cuts.

      Exactly. On Jan 2nd, the Democrats are going to come back and pass a bill that reduces taxes for those making less than $250K, and attach repeals of the sequester cuts to domestic spending.

      The only thing the R’s can do is refuse to to vote on it, leaving tax rates higher for everyone. And when the middle-class sees that first hit on their paycheck in January, the shit iwll hit the fan and it will be over for the R’s.

      1. It cant reach the floor of the House to be voted on without GOP approval. What the fuck are you talking about?

        1. The Republicans will block the bill and therefore “be responsible” for higher tax rates.

          I fail to see how you don’t see that.

          1. Right. There’s nothing they can do about the higher tax rates on the wealthy. All they can do is sulk and refuse to lower taxes for everyone else.

          2. If they combine it with Clinton era spending, I think having Clinton era taxation would be “responsible”.

            1. Bingo. Start with a 50 percent spending cut across the board, to get back to Clinton-era spending, since it has doubled since then.

        2. It’ll pass in the Senate.

  6. Now what?

    Mayan Aztec priests drag the speaker to the top of the pyramid and cut his still-beating heart out with obsidian knives?

    One can only hope.

  7. If the outcome is negative, which it surely will be whether through a deal or failure of a deal, the Republicans will shoulder the blame. However, each individual House member really only needs to be concerned with his own district, and I can assume there are enough conservative strongholds that would punish any vote to raise taxes to queer any deal that included it.

    The political manuevering here should be enough to remind the country the disfunction in Washington, but as I said, the story will be framed by the White House and its willing press that the GOP is solely the cause.

    1. Of course they will take the blame. The country needs its Goldstein now more than ever.

    2. The only possiblity for the R’s to not take the blame was plan B.

      They could have had their own “tax cuts for nearly everyone” plan. And then the D’s would have been the ones stalling so they could raise taxes on people between $250K and $1 M.

      You know a lot of people have been bitching about how $250K in the DC or NY area isn’t rich.
      They could have turned the tables.

      But they’re retarded.

      1. There is another possibility: vote to extend the tax cuts for everyone.

        If raising rates on incomes over one million was the problem, drop that and pass a bill in the House extending the current rates.

        1. They already did that. Reid won’t let it come to a vote on the Senate floor.

  8. Now What?

    Now he continues to sell us out entirely.

  9. At this point do “we”…libertarians….. care about the outcome of this theater? Taxes are going up regardless. PelosiCare is the law of the land as the orange one stated.

    Frankly I’m looking forward to seeing TEAM RED/BLUE incompetence in full flower as we go forward from here.

    I’m with RC!

    Jump you fuckers!”

  10. That will mean higher tax rates on everyone, at least until Congress inevitably passes a bill to reinstate the Bush tax cuts for everyone below $250,000.

    Suderman, Why do you keep assuming that is going to happen, instead of reinstating for everyone, for example?

    1. Because Obama has no incentive to agree to that. He campaigned on soaking the rich, and now he doesn’t have to worry about an election – so any economic damage from a tax hike is moot.

      Tax hikes aren’t a pill for Obama to swallow in order to get deficit reduction – they are a good in and of themselves.

      1. He does if the option is a government shutdown.

        1. That will not happen, robc. Boehner will cave before allowing that to be an option.

  11. This just really is proof that the Republicans are the stupid party.

    What sounds better to you? The “fiscal cliff”, or the “fiscal cliff” with fewer tax hikes.

    Apparently the Republicans prefer the former. And what is it going to get them? The day after January 1, all the tax hikes take effect and then they are really in for shit. Hundreds of millions of people are going to see their payroll taxes go up their first pay period after the new year. And they are going to blame the Republicans.
    And the Democrats will then have all the leverage. They will pass a plan to reduce taxes for those making

    1. making under $250K, and they will attach all sorts of spending to it, and it will be skewed in favor of discretionary spending over defense, and they will hand it to Republicans and tell them to pass it or face the blame for those hundred million some people seeing their taxes go up.

      The Republican prefer shooting themselves in the foot, apparently. They are retarded. Taxes are going to go up on people making over $1,000,000 ANYWAYS. There’s nothing they can do about that.

      You don’t have that fucking card in your fucking hand, morons.

      1. They control the House. They control spending. Tax increases must begin with them.

        They control ALL the cards.

        1. The problem is, they are a bunch of pussies led by the King pussy himself.

        2. The fact that taxes go up in January is already law, rob, they already voted for it in 2011.

          They can’t do anything to stop tax rates from going up.

          1. They can attach the restoration to every fucking bill they pass.

            1. And it will be DOA in the senate.

              And as long as taxes stay higher for everyone, the pressure on Republicans to cave will keep increasing. Their constituents will be screaming bloody murder.

              1. Their constituents will be screaming bloody murder.

                Because people are fucking morons. Nothing is going to change that.

                1. People are fucking self interested.

                  When they are taking less money home in every paycheck, that makes a bigger difference than some theoretical cost associated with people making over $1,000,000 paying more in income tax.

                  But personally, what I care about is reducing spending, and the R’s just threw away whatever leverage they might have had to force more spending cuts.

                  1. They still have all the leverage to force spending cuts.

                    Pass a small budget.

                    The Senate/prez either accept it or they get $0 and the government shuts down.

                    1. If they shoot it down, pass a smaller budget as a followup plan.

                    2. Cause that worked out so well the last two times the R’s tried it.

                    3. I thought it actually worked really well back in the mid-90s.

                  2. When they are taking less money home in every paycheck, that makes a bigger difference than some theoretical cost associated with people making over $1,000,000 paying more in income tax.

                    So that makes them envious fucking morons. They’re too stupid to see that raising the taxes on the “rich” folks isn’t going to make the slightest dent.

                    1. They might see that perfectly well, and still not give a shit. It’s their fucking paycheck getting smaller that is going to count.

                    2. It’s their fucking paycheck getting smaller that is going to count.

                      And how long do you think it will take them to blame the people who are really responsible for that? Do you think it’s the Dems or the Reps at fault here? It’s a problem with the whole fucking mess. The only reason the Reps are fighting it now is because the President is a Dem.

              2. Hazel, I think you are REALLY overstating the impact of the tax increases.

                Realistically most middle class people will see their annual tax bill go up by less than $1000 a year. Spread that out over 26 pay periods and you’re looking at about $40 a paycheck, sure it is a hit and no one is going to be happy about it but they are unlikely to be rioting in the streets either.

                1. IIRC the total impact of all the tax hikes is more like $3000 / year.
                  I’m including the payroll tax cut extension and the suspension of the AMT as well.

  12. Our government gets lost in the weeds just as this comment section gets lost in the weeds. It’s just not worth subjecting my thought processes to trudge through the weeds any further. A better use of my time would be rereading Democracy, the God that Failed by Hans-Hermann Hoppe.

    1. Off you go then. Thanks for stopping by.

    2. “The weeds” are the only relevant things there are.

    3. What? Leave the comments and do your own thing, without showering your enlightenment on us? That’s worse than Depardieu leaving France when they’re in the middle of a fiscal crisis, and not paying his fair share in wealth taxes!

      1. Thanks CE, but even you would prefer my wealth over my enlightenment.

  13. That will mean higher tax rates on everyone, at least until Congress inevitably passes a bill to reinstate the Bush tax cuts for everyone below $250,000.

    “Inevitable” does not mean what you think it does, Suderman. Boehner tried to raise taxes, and lost. Through some convoluted reasoning, you think that the refusal to raise taxes on anyone at all means those same people will agree to raise taxes on even more people than Boehner proposed?

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