Economy & Budget

Plan B deal collapses, House goes home

Plan B deal collapses, House goes home

Updated 9:10 p.m.

A defection of conservative Republicans forced House Speaker John Boehner to abandon his final-hour plan to block automatic tax increases, leaving taxpayers hanging on the edge of the fiscal cliff that is scheduled to crumble on Jan. 1.

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in statement Thursday night after cancelling the vote and sending members home for the Christmas holiday.

“Now it is up to the president to work with Sen. (Harry) Reid on legislation to avert the fiscal cliff,” Boehner said.

The collapse was announced shortly after an emergency GOP conference was called at 7:45 p.m. to count votes and twist arms, just moments before the legislation was
to be debated on the House floor.

The bill is referred to as “Plan B” and would have averted an automatic tax increase for families making less than $1 million a year but raised tax rates for those making more than $1 million.

A second bill to block military and domestic spending cuts that are part of sequestration narrowly passed Thursday on a vote of 215 to 209 with no Democratic support and 21 Republicans voting no.

Senate Majority Leader Harry Reid (D-Nev.) said the “Plan B” bill would have been dead on arrival in the upper chamber. The plan was offered by Boehner (R-Ohio) after failed negotiations with President Barack Obama to avert the tax hikes and spending cuts.

Without a deal, taxes are on autopilot to increase $4.6 trillion over the next decade along with $1.2 trillion in cuts across the board.

“We don’t believe taxes should go up on anybody, but if we can prevent taxes from going up on as many people as possible … we must and need to do so,” House Majority Leader Eric Cantor (R-Va.) said on the House floor, just hours before the fallout among Republicans.

Obama wanted to keep the tax hike on families making more than $250,000 a year, then conceded to raise that threshold to $400,000 or more if new unemployment benefits and new stimulus spending were added – a plan estimated to cost $1.3 trillion.

“The president has been unwilling to consider serious spending cuts or offer a serious and balanced plan to avoid fiscal cliff,” Cantor said.

Rep. Paul Ryan (R-Wis.), Budget Committee chairman, rebranded the situation as a fiscal abyss that will dramatically damage the economy and the budgets of American families. “We want to avert this crisis, but that means we’ve got to get spending under control and prevent tax increases from hitting as many Americans as possible,” Ryan said. “The president says he wants even more taxes and more net spending, that is hardly a balanced approach. Spending is our problem.”

Rep. Tom McClintock (R-Calif.) said Obama is on a “eat the rich crusade,” but if the impasse continues everyone will face a tax increase.

“The president says he wants to protect everybody but those greedy millionaires and billionaires and that’s exactly what this bill does, but he’s vowed to veto it,” McClintock said.

In addition to blocking a tax increase on 99.81 percent of all Americans, Boehner said his plan would have made permanent the alternative minimum tax, marriage penalty tax, death tax, child tax credit and capital gains and dividends rates.

The legislative package was intended to head off the expiration of all Bush era tax cuts by conceding a tax hike only on the highest earners, which would see their tax rate climb from 35 percent to nearly 40 percent.

After mounting opposition from conservatives to a tax increase on high wage earners, Boehner added the sequestration bypass legislation that would target $200 billion in spending cuts in defense and domestic appropriations over the next ten years, eliminating the across the board cuts next year.

Rep. Buck McKeon (R-Calif.), chairman of the Armed Services Committee, said that if Congress and the president fail to pass the legislation addressing the indiscriminate military cuts, it would allow one of the “most significant and damaging blows to our troops in history.”

“It will take generations to fix,” McKeon said. “We must not allow an impasse of our own doing to harm our armed forces. I hope we don’t ask them to shoulder the weight of Washington’s irresponsibility.”

Reid told reporters the legislation was a “pointless political stunt” and that he had no intention of allowing a vote to occur in the upper chamber.

“There is noting to discuss, we are not taking up anything they are working on. Speaker Boehner’s plans are a non-starter in the Senate. It’s time for Republicans to get serious,” Reid said.

While denying a vote on the House package, Reid demanded that the House vote on a Senate bill that would raise taxes on families making more than $250,000.

House Democrats called the Boehner plan a political hoax, extreme legislation that is deeply cynical at its core.

“We are watching an attempt to perpetuate a hoax,” said Rep. Louise Slaughter (D-N.Y.) ranking member of the Rules Committee. “This plan doesn’t come anywhere close to being a solution. (Republicans) seem to think if they pass extreme legislation and then run for the hills, the rest of us will be forced to follow.”

Democrats insisted that under the Republican plan, the wealthy would get tax cuts while the middle class foots the bill, reasoning that it did not include even more tax credits for education, new unemployment benefits or an expansion of the food stamps program.

DEVELOPING — The House abruptly recessed Thursday night until after the Christmas holiday abandoning a last-minute bill to avert the fiscal cliff of increased taxes and spending cuts because the deal did not have enough Republican votes.

The collapse was announced shortly after an emergency GOP conference was called at 7:45 p.m. to count votes and twist arms, just moments before the bill was to be debated on the House floor.

The bill, referred to as “Plan B” would bypass an automatic tax increase for families making less than $1 million a year, but raises tax rates for those making more than $1 million.

A second bill to block military and domestic spending cuts that are part of the sequester narrowly passed earlier this evening 215 to 209 with no Democratic support and 21 Republicans voting no.

Senate Majority Leader Harry Reid earlier Thursday said the bill would be dead on arrival in the upper chamber.

The plan was offered by House Speaker Boehner (R-Ohio) after failed negotiations with President Barack Obama to avert the tax hikes and spending cuts.

Without a deal, taxes are on autopilot to increase $4.6 trillion over the next decade along with $1.2 trillion in cuts across the board.

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