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Boehner's 'fiscal cliff' plan fails

The speaker cancels a vote on his Plan B tax idea for lack of Republican support. He now assumes a lesser role in talks with President Obama and Democrats.

December 21, 2012|By Lisa Mascaro, Michael A. Memoli and Christi Parsons, Washington Bureau
  • House Speaker John A. Boehner leaves a meeting of House Republicans. With the failure of his Plan B tax proposal, it is now up to President Obama and Democrats to forge a budget deal by the end of the year.
House Speaker John A. Boehner leaves a meeting of House Republicans. With… (Associated Press, Alex…)

WASHINGTON — House Speaker John A. Boehner abruptly canceled a vote on his Plan B tax proposal late Thursday after failing to find enough GOP support, a stunning political defeat that effectively turned resolution of the year-end budget crisis over to President Obama and the Democrats.

The speaker had spent the last few weeks negotiating one-on-one with the president, establishing himself as the second-most powerful figure in Washington. But with his strategy imploding, Boehner conceded that he would play a lesser role.

"Now it is up to the president," he said, to work with a fellow Democrat, Senate Majority Leader Harry Reid of Nevada, "to avert the fiscal cliff."

The proposal the speaker had hoped to bring to a vote would have prevented a year-end tax increase for all but those earning more than $1 million a year.

But the Ohio Republican said in a statement, "It did not have sufficient support from our members to pass."

The unexpected turn of events caused an immediate reaction on Wall Street, where after-hours investors began to yank money out of U.S. stocks. Futures that track the Standard & Poor's 500 fell 1.5%, and the Dow Jones industrial average dropped 1.6%.

Now, Obama faces a crucial test of his leadership, with little time left to craft a deal.

Obama's most recent offer is likely to be the starting point. He made a substantial concession: raising taxes only on household income above $400,000, rather than the $250,000 threshold he campaigned on for reelection.

As he pursues votes in Congress, the president will need to face down Democrats, particularly the liberal wing that may feel emboldened to demand that a deal be tilted toward their views — perhaps with additional spending on infrastructure or unemployment benefits.

Any compromise will need substantial Democratic support. Although the president needs the speaker to allow legislation to come to a vote in the GOP-controlled House, Boehner emerges in a weakened position and has little leverage to demand further concessions. His Senate counterpart, Mitch McConnell (R-Ky.), will need to decide whether to become a final line of defense against Obama or step aside for a Democratic-led plan.

"The president's main priority is to ensure that taxes don't go up on 98% of Americans and 97% of small businesses in just a few short days," White House Press Secretary Jay Carney said after Boehner canceled the vote. "The president will work with Congress to get this done, and we are hopeful that we will be able to find a bipartisan solution quickly."

Without a compromise, most Americans will see their taxes automatically rise and spending cuts ripple across the economy in the new year. The White House and the speaker had been closing in on a broad deficit-reduction deal to steer around the coming "fiscal cliff," but Boehner suddenly changed course this week to gauge the sentiment of House Republicans.

The support expressed by top Republicans for new taxes has cracked the party's anti-tax orthodoxy and opened the door to a compromise that would have been unthinkable before the November election.

Mindful that his own job as speaker comes up for a vote in two weeks, Boehner must make a difficult choice: whether to allow a plan to come to the House floor without support from his majority, or play a key role in sending the nation over the fiscal cliff and raising taxes on most Americans.

As the speaker and his lieutenants trolled for votes earlier Thursday, buttonholing lawmakers in scenes like those in the movie "Lincoln," Carney dismissed Boehner's Plan B as a "multi-day exercise in futility."

"Instead of taking the opportunity that was presented to them to continue to negotiate what could be a very helpful large deal for the American people, the Republicans in the House have decided to run down an alley that has no exit," he said.

Late in the evening, as the time for voting neared, the House took an unscheduled recess — a sign that the tally had come up short. With Democrats almost unanimously against the bill, Boehner could afford to lose only two dozen Republican defectors.

The speaker and his top lieutenants then convened a late-night meeting of rank-and-file lawmakers and announced they were pulling the bill.

"We don't have the votes," the speaker said, according to a lawmaker in the room.

Conservatives split over Plan B, complicating Boehner's quest. He received a major assist when anti-tax stalwart Grover Norquist's Americans for Tax Reform declared that the bill was a vote for lower taxes and did not violate the pledge most Republicans had signed not to raise taxes. But other leading conservative groups opposed it, including FreedomWorks, which is extremely influential with tea party supporters.

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