Boehner Invokes ‘Plan B,’ Dismissing Obama’s Offer

The move came less than 24 hours after President Obama offered a more comprehensive deal that would raise tax rates on income over $400,000, raise $1.2 trillion in new revenue and cut $930 billion in spending over 10 years. Mr. Boehner declared that unbalanced and insufficient.

“What we’ve offered meets the definition of a balanced approach, but the president is not there yet,” Mr. Boehner said Tuesday.

The speaker made it clear he would continue negotiating with the president, and some House Republicans emerged from a closed-door meeting with Mr. Boehner confident that a deal was now in reach.

“We’re getting there,” said Representative James B. Renacci, Republican of Ohio.

But to raise the pressure, House leaders will proceed with what they are calling “Plan B,” which could come to a vote as early as Thursday. Under that plan, the House would take up tax legislation and consider two amendments. The first would mirror a bill passed by the Senate that would extend expiring Bush-era tax cuts for income below $250,000. That would be expected to fail, showing the president that his initial offer could not pass. A second amendment would raise that threshold to income below $1 million. The House may also vote on some middle ground, like the president’s $400,000 threshold.

Mr. Boehner told his conference that he would also like the bill to include provisions preventing the existing alternative minimum tax from expanding more to affect the middle class and extending existing tax rates on inherited estates.

But he said the bill would not cancel across-the-board spending cuts, known as sequestration, that would total $110 billion in 2013 and more than $1 trillion over 10 years.

Republicans would then resume the fight over broad spending cuts — especially to entitlement programs like Medicare — in late January or February, when the government must raise its borrowing limit, which many Republicans believe will give them much more leverage than they have now.

Mr. Boehner told Republicans on Tuesday: “Taxes are going up on everyone on Jan. 1. They’re baked into current law. And we have to stop whatever tax rate increases we can. In the absence of an alternative, as of this morning, a ‘modified Plan B’ is the plan.”

Representative Kevin McCarthy of California, the Republican whip, said his operation would be checking whether the party had the votes to pass any tax legislation. If Democrats stay united against the $1 million threshold, it could fail because some Republicans are unlikely to ever vote for a tax increase. Representative Nancy Pelosi of California, the Democratic leader, met with House Democrats on Tuesday and urged unity against the speaker’s plan.

The White House came out strongly against the speaker’s move. The White House press secretary, Jay Carney, said “Plan B” could not pass the Senate and “therefore will not protect middle-class families” from large tax increases beginning Jan. 1.

“The president has put a balanced, reasonable proposal on the table that achieves significant deficit reduction and reflects real compromise by meeting the Republicans halfway on revenue and more than halfway on spending from where each side started,” he said. “That is the essence of compromise.”

It is not clear how much this alternative plan is real or a bargaining tactic to extract more concessions from Mr. Obama. Rob Nabors, the president’s chief liaison to Congress, met with House Democrats on Tuesday and said talks were moving forward. But privately, he expressed pessimism that Mr. Boehner could sign on to any deal, according to people familiar with those conversations.

In spite of statements to the contrary just a week ago, House Republicans on Tuesday seemed almost uniformly resigned to some sort of tax rate increases on the nation’s highest earners, though they remained committed to keeping that group as small as possible. “The principle of trying to limit the increases is a good one,” said Representative Jason Chaffetz of Utah. “But now we’ve got to see more spending cuts.”

Jennifer Steinhauer contributed reporting.

Article source: http://www.nytimes.com/2012/12/19/us/politics/backing-off-deal-boehner-invokes-plan-b-on-taxes.html?partner=rss&emc=rss