White House rejects Boehner's 'fiscal cliff' Plan B

WASHINGTON -- With the "fiscal cliff" looming, House Speaker John Boehner presented a plan to fellow GOP lawmakers Tuesday to move forward with a bill that will raise tax rates for Americans making more than $1 million if they fail to reach a final deal with President Obama.

Boehner said his Plan B does not mean he has given up on negotiations with the White House, but the speaker said he believes that the threat of tax rates rising for all Americans is too great not to have a backup plan.

"For weeks, Senate Republicans - and a growing number of you - have been pushing for us to pivot to a 'Plan B,'" Boehner told House Republicans. "I think there's a better way. But the White House just can't seem to bring itself to agree to a 'balanced' approach, and time is running short."

The maneuvering is more tactical than pragmatic. Senate Majority Leader Harry Reid, D-Nev., made it immediately clear that the Democratic-controlled Senate would not take up the speaker's alternative proposal. "Now is the time to show leadership, not kick the can down the road," Reid said. White House spokesman Jay Carney also rejected the proposal 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."

Carney added that the president is still working toward a final deal that cuts future deficits by about $4 trillion over the next decade. "We are very close to being able to achieve that," he said, "And the president has demonstrated an obvious willingness to compromise and to move more than halfway towards the Republicans."

Under the speaker's 'modified Plan B' scenario, the U.S. House would take up a bill to extend the expiring George W. Bush-era tax cuts for all but the top 2% of earners. However, it would not turn off the looming "sequester," a painful $1.2 trillion in automatic spending cuts that will begin Jan. 1. The speaker also said proposals addressing the expiring Alternative Minimum Tax patch and the estate tax could be included in his package, which could be on the floor as early as Thursday.

The plan met with resistance from Republicans who oppose any deal to raise taxes. "I'm a 'hell no,'" said Rep. Raul Labrador, R-Idaho, a conservative freshman.

The most recent fiscal cliff offer came late Monday from the White House. It included $1.2 trillion in revenue and $1.2 trillion in spending cuts following an offer over the weekend by Boehner for $1 trillion in revenues for $1 trillion in spending cuts. The president's offer included concessions on tax rates beginning at incomes over $400,000 for couples, a change from his campaign pledge to let the tax cuts expire on those making more than $250,000.

The speaker rejected the offer because Republicans said they believe the White House uses budgetary gimmicks to account for their $1.2 trillion in spending cuts. He told reporters that a "balanced" deal will likely have to include equal tax raises and spending cuts. "Most people would agree that that's balanced," Boehner said. The speaker and the president also remain at odds over raising the debt ceiling, the nation's borrowing authority, as part of a final deal, as well as what entitlement cuts to include.

Republicans want to change the way cost-of-living adjustments are calculated for Social Security beneficiaries, but Boehner softened his tone Thursday on earlier GOP proposals to raise the eligibility age for Medicare. "I don't believe it's an issue that has to be dealt with between now and the end of the year," he said.

White House negotiator Rob Nabors briefed House and Senate Democrats on the White House offer, which includes extensions for unemployment benefits but no proposal to continue the 2% payroll tax holiday, which is likely to be met with resistance from some Democratic lawmakers. Asked if he could support a final deal that includes changes to calculating benefits, Reid - who has opposed it in the past - said "this isn't going to be a situation where we're going to vote on a particular provision in the bill. It's going to be a framework to do something about the long-term security of this country."

Obama also continues to seek additional stimulus spending for infrastructure projects that Democrats support but Republicans oppose. Senate Finance Chairman Max Baucus, D-Mont., told reporters that the president's offer was "probably not what the final deal is going to be."

Despite the lingering differences, the president and the speaker have made significant progress toward reaching a final deal, and lawmakers on both sides were optimistic Tuesday that the fiscal cliff could be avoided. "I think that the best Christmas gift that we could give America is an agreement," said Rep. Cathy McMorris Rodgers, R-Wash, "I'm confident that we can get it done. This is our moment. And this is our moment to do what's good and right for America."

Added Baucus: "They're doing it - the speaker and the president - Godspeed. Hope they make it."

USA Today