Economy & Budget

Fiscal cliff update Dec. 19: Boehner moves forward

Fiscal cliff update Dec. 19: Boehner moves forward

For now, and with 12 days left to go in the fiscal cliff debate, it appears that things may be moving in the direction of a resolution. President Obama and Speaker of the House John Boehner continue discussions and trading offers, but with the latter now seeking to pass two bills — one which raises taxes on all incomes over $250,000, per Obama, and the second, which raises taxes only on those with incomes over $1 million — the House may be leaving the fiscal cliff mess in the hands of the Senate and the president.

With “Plan B” on the table now, and a vote expected in the House perhaps by Thursday, Republicans may be showing their aversion to taxes, though it is difficult to see how this proposal is ultimately fiscally responsible since it raises taxes now, without calling for any definitive spending cuts to correlate.

Stay tuned for the latest news and updates below:

Human Events: ATR statement on ‘Plan B’ tax plan
ATR has consistently maintained that individual Members of Congress make a pledge to their constituents to oppose and vote against tax increases.  The House this week will vote on a tax bill.  This legislation—popularly known as “Plan B”–permanently prevents a tax increase on families making less than $1 million per year.  Republicans supporting this bill are this week affirming to their constituents in writing that this bill—the sole purpose of which is to prevent tax increases—is consistent with the pledge they made to them.  In ATR’s analysis, it is extremely difficult—if not impossible—to fault these Republicans’ assertion.

Forbes: The Fiscal Cliff: The Perfect Storm And The Collapse Of The Dollar?
The American economy is massive and extremely resilient. However, today, there are events converging into what could result in the “Financial Storm of the Century.” Although this may be slightly overreaching, nonetheless, a problem is brewing with the ingredients of a most fatal brew. In this article we’ll examine these forces and discuss their potential impact on the U.S. economy.

Fox News: What would Reagan do about America’s fiscal crisis?
As President Obama and Democrats urge Republicans to increase taxes, liberals curiously invoke the name of Ronald Reagan, the ultimate tax-cutting Republican. They insist that even Reagan was willing to compromise with Democrats on tax increases; thus, John Boehner and Republicans should as well. In truth, this is (at best) a false parallel.  It is correct that Ronald Reagan occasionally compromised on certain tax increases, as he did in 1982. He did so in exchange for promised spending cuts from Democrats that (not surprisingly) never materialized, to his great regret. Reagan would constantly point back to this broken promise by Democrats.  More importantly, however, President Reagan never budged on income taxes.

AP: White House threatens veto of Boehner’s ‘Plan B’
The White House says President Barack Obama would veto House Speaker John Boehner’s ‘Plan B’ proposal for extending tax cuts for people making up to $1 million. White House communications director Dan Pfeiffer says it is unlikely that such a bill would pass the Senate. In a statement, he says the deficit reduction that would result from the ‘Plan B’ approach is minimal and offers no spending cuts. Pfeiffer says Obama urges Republican leaders to work with the White House to find a reasonable solution instead of engaging in “political exercises.”

Washington Examiner: Three lost issues in ‘fiscal cliff’ debate
To avoid the so-called fiscal cliff, the combination of tax increases and spending cuts that will take place on Jan. 1, will take the coordinated efforts of both houses of Congress and the president.  On Monday, President Obama proposed increasing taxes from current levels for those who make $400,000 or more in annual adjusted gross income.  This follows the proposal from Republican House Speaker John Boehner to raise taxes for those earning $1 million or more, accompanied by entitlement cuts.  Three additional aspects of the fiscal cliff that get little attention would be particularly damaging.  First, the alternative minimum tax will be fully effective for 2012 if Congress doesn’t pass a “patch,” as it has in previous years.

Bloomberg: Boehner ‘Plan B’ Vote Aims to Show Obama Republican Tax Aversion
U.S. House Speaker John Boehner aims to use a vote on his alternate budget proposal to highlight Republican opposition to tax increases sought by President Barack Obama, as the two sides negotiate a larger fiscal deal.  The House may vote tomorrow on Boehner’s “Plan B,” which would raise tax rates on income over $1 million, rather than the $400,000 threshold the president proposed in his latest offer. The Obama administration and Democrats rejected the Boehner plan, released yesterday, as inadequate.  With his push for a vote on his proposal, Boehner is looking to pressure Obama to accept deeper spending cuts and a higher threshold for rate increases by showing how hard it will be to win Republican support for any tax increase. Unless Congress acts, more than $600 billion in tax increases and spending cuts will begin next month.

NYT: Boehner Plan Addresses Taxes but Delays Fight Over Spending Cuts
House Republican leaders struggled on Tuesday night to rally their colleagues around a backup measure to ease the sting of a looming fiscal crisis by allowing tax rates to rise only on incomes over $1 million.   The plan would leave in place across-the-board spending cuts to military and domestic programs that Republicans have been warning could have dire consequences, especially to national defense.  Speaker John A. Boehner unveiled what he dubbed “Plan B” less than 24 hours after President Obama offered a more comprehensive deal that would raise tax rates on incomes over $400,000 and, over 10 years, produce $1.2 trillion in tax increases and cut $930 billion in spending.

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