House Speaker John Boehner (R-OH) announced Tuesday that he’ll bring a bill to a vote this week that will extend the Bush tax cuts for all income under $1,000,000, a plan that House Minority Leader Nancy Pelosi (D-CA) endorsed before the election to point out that Republicans were not willing to raise taxes on anyone.
The president “is not willing to accept a deal that doesn’t ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors,” White House spokesman Jay Carney said in a statement. “The Speaker’s ‘Plan B’ approach doesn’t meet this test because it can’t pass the Senate and therefore will not protect middle class families, and does little to address our fiscal challenges with zero spending cuts.”
Boehner’s self-proclaimed “Plan B” is an attempt to settle the largest part of the so-called “fiscal cliff” before the Christmas holiday, and reassured Wall Street.
The speaker also promised to continue negotiations with President Obama for a larger settlement that would prevent the sweeping sequestration, which would make potentially painful cuts to the military, Medicare, education and other discretionary spending.
President Obama’s latest offer, which came after his private meeting with Speaker Boehner Monday night, is a tribute to his advantage in these negotiations compared to the debt limit negotiations of 2011. The “grand bargain” he offered then was reportedly 3-to-1 spending cuts to revenue versus this proposal, which nearly balances spending cuts with the ending of tax breaks exactly. That deal was said to raise the Medicare eligibility age to 67 and implement a “chained CPI” on Social Security and Medicare that would decrease benefits on an ongoing basis.
The president’s current offer includes no increase in eligibility. However, it does include the Social Security and Medicare cuts, with a possible exception for lower-income Americans. In a concession to Republicans, the president also offered to raise the threshold of income that would retain the Bush tax breaks to $400,000. Extending the debt ceiling for two years was also part of the deal.
The offer did not include the extension of the temporary payroll tax cut that began in 2010, meaning middle-class Americans will pay around $1,000 more a year.
Senator Dick Durbin (D-IL), a close friend and former mentor of the president, rejected the idea of making cuts to Social Security benefits Tuesday.
“We ought to deal with Social Security in a separate conversation that is not part of deficit reduction,” Durbin told The Washington Post‘s Greg Sargent. “To do it at this stage is the wrong way to go.”
In addition, the nation’s largest progressive group, MoveOn.org, reacted harshly to the proposed deal, saying that they would do everything in its power to kill it.
“MoveOn members overwhelmingly oppose cuts to Social Security, Medicare, and Medicaid benefits, and they’ve made clear that they would see any fiscal agreement that cuts such benefits as a betrayal that sells out working and middle-class families — whether the cuts come via a chained CPI, increased Medicare eligibility age, or in some other form,” said MoveOn executive director Justin Ruben.
On the other side, the Club for Growth, a right-wing organization that prides itself on defeating Republicans who vote to raise taxes in primaries, has blasted Speaker Boehner for offering to raise rates and including a raising of the debt ceiling in a deal. “The debt ceiling is the only mechanism in law that can restrain spending and hitting it forces Washington to confront its spending problem,” Club for Growth president Chris Chocola said in a statement Monday.
The New York Times columnist and Nobel Prize-winning economist Paul Krugman wrote Monday, “[C]utting Social Security benefits is a cruel, stupid policy — just not nearly as cruel and stupid as raising the Medicare eligibility age. But sometimes you have to accept bad things in pursuit of a larger goal…”
He said he was “agonizing” about the deal already and any further concessions would be a “non-starter.”
But clearly Boehner will demand more concessions.
This leads us to the need for a “Plan B.” We’ll find out if Boehner has enough Republican support to pass his plan in the House if he brings it up for a vote.
Meanwhile, Democrats already have their own Plan B — the Senate passed a bill that would extend tax cuts on all incomes under $250,000 this summer. The question is if negotiations fail and the Senate won’t take up Boehner’s bill, will Boehner give it a vote or go willingly over the cliff?
Photo credit: AP Photo/J. Scott Applewhite