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Boehner changes gears in 'fiscal cliff' talks with Obama

Just as he and the president appeared to be within reach of a deal, the House speaker calls for a vote on raising taxes only for those who make more than $1 million.

December 18, 2012|By Lisa Mascaro, Christi Parsons and Michael A. Memoli, Washington Bureau
  • Senate Majority Leader Harry Reid, speaking to the media on Capitol Hill, called House Speaker John Boehner’s shift in “fiscal cliff” negotiations “a Charlie Brown episode,” with Boehner in the role of Lucy pulling away the football at the last minute.
Senate Majority Leader Harry Reid, speaking to the media on Capitol Hill,… (Michael Reynolds / European…)

WASHINGTON — The effort to resolve the standoff over federal spending and taxes snagged once again Tuesday — just a day after House Speaker John A. Boehner and President Obama appeared to make substantial progress — as Boehner abruptly shifted to what he called Plan B.

The speaker's new proposal calls on the House to vote on a measure that would prevent taxes from going up except for those earning more than $1 million a year. The proposal drew opposition from the White House and Senate Democrats as well as from some House conservatives.

The speaker made clear that he is not cutting off talks with Obama, but Democrats characterized Boehner as walking away just as compromise appeared within reach.

This week, Obama made what White House aides saw as a substantial concession by telling Boehner that he would accept an agreement raising taxes on household income above $400,000, rather than the $250,000 threshold he had previously insisted on. He also proposed changes to reduce the long-term cost of government benefit programs, including Social Security.

"It's a Charlie Brown episode," said Senate Majority Leader Harry Reid (D-Nev.), casting Boehner in the role of Lucy pulling away the football.

The negotiations are aimed at heading off tax increases for almost everyone Jan. 1 and steep cuts in government spending that are scheduled to begin the next day. Boehner has had the difficult task of negotiating in two directions, seeking a deal that would meet Obama's insistence that taxes rise for high-income Americans but still be acceptable to Republicans in the House who oppose any tax increases.

The speaker's latest move seemed to please neither side.

"I would say that the president, demonstrating his belief that a balanced, large deficit reduction package is a worthwhile goal, has shown evident willingness to meet the Republicans halfway," said White House Press Secretary Jay Carney. "We have to have balance."

"I hate it. I hate it," Rep. Jason Chaffetz (R-Utah) said of Plan B. But Chaffetz, an outspoken conservative, did not say he would oppose Boehner.

"I'm trying to be reasonable," he said. "I understand no one person is going to get everything they want."

Conservatives want more spending cuts, but not the massive automatic reductions scheduled to take effect next year. Boehner's Plan B would keep those automatic cuts in place.

Freshman Rep. Sean Duffy (R-Wis.) said reaction was mixed as Boehner spoke to House Republicans at a morning meeting. "This is a reality check; people are trying to grapple with the situation in which we sit right now."

Senate Republicans showed modest enthusiasm for Boehner's plan.

By bringing his Plan B to a vote, possibly as soon as Thursday, the speaker could get an early read on how many Republicans would be willing to vote for a tax increase. He may also hope to deflect attention from his talks with the White House.

Under Boehner's plan, the top income tax rate, now 35%, would rise to 39.6% on income above $1 million. The plan would also increase tax rates on capital gains and dividends to 20% from the current 15% for those high-income households.

Obama's latest offer also would set capital gains and dividend tax rates at 20%, but that rate would kick in at $250,000.

Boehner also would schedule a vote on Obama's original proposal to keep tax rates the same for the first $250,000 of income for families and $200,000 for individuals, but raise rates on income above that level. That proposal would not be expected to pass the House.

Democrats continue to have reservations about the White House's willingness to engage with Boehner on cuts to domestic programs and the social safety net.

One proposal in particular — to reduce the cost-of-living adjustment for those who receive government benefits, including Social Security and veterans benefits — would be a major concession for Democrats. Boehner included those cuts in his Plan B.

The White House has aimed to soften the blow by exempting certain populations — including disabled people and possibly wounded veterans — and offering an increase in benefits to those older than 80, officials said.

Still, the proposal has angered some activists. Eric Kingson, co-chairman of the Strengthen Social Security coalition, called the changes to the cost-of-living adjustment a "stealth-like way to cut benefits."

lisa.mascaro@latimes.com

christi.parsons@latimes.com

michael.memoli@latimes.com

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