Speaker of the House John Boehner and President Obama were within a hair’s breadth of a budget deal just a few days ago.
The most recent White House offer had $1.2 trillion in tax increases over 10 years; Boehner’s final offer had $1 trillion. The White House offered $925 billion in spending cuts, including $725 billion to Social Security, Medicare, and Medicaid; Boehner offered $1 trillion in cuts. The President also wanted an additional $175 billion in either direct spendings or extended tax cuts as stimulus; Boehner offered 0. Click here for a good chart.
Put a couple of reasonable people in a room together, and they could easily split those very small differences.
But it seems that Boehner could not sell that plan to more than half the House Republicans.
So he pushed for a vote on a plan that would have raised tax rates only for those earning over $1 million — a plan that would have also hit working folks hard because of cuts to the child tax credit and earned income tax credit.
But Boehner couldn’t even keep his caucus together for that so-called Plan B, a vote on which was abruptly called off tonight.
From Boehner abandons plan to avoid ‘fiscal cliff’ in The Washington Post:
Boehner’s sudden move throws into chaos efforts to avoid the fiscal cliff, just 11 days before more than $500 billion in automatic tax increases and spending cuts are set to take effect. Unless Congress acts, many economists predict the nation will again descend into a recession.
The House is now recessed until after Christmas and the Senate is scheduled to meet for only a few hours Friday afternoon before members leave town until Dec. 27.
Boehner’s inability to rally the House behind a proposal that would have preserved tax cuts for more than 99 percent of Americans — raising rates for only about 400,000 extremely wealthy families — casts doubt on his ability to pass any alternative to the fiscal cliff. It also underscores the limited clout that he and his leadership team wield within the Republican caucus.
I’m quite confident that there would be adequate votes in the House — a solid majority of Democrats and a decent minority of Republicans — to pass a deal like the one Obama and Boehner nearly had sealed.
If Boehner even allows that vote to come to the floor. If Boehner is even still speaker in a few days.
Or maybe we’ll just head over the so-called “cliff”, which — as I keep arguing — is a surefire way to reduce the debt.
Check out this graph from The Committee for a Responsible Federal Budget, which clearly illustrates that the deals on the table a few days ago are virtually indistinguishable from each other and only maintain the status quo of a public debt just north of 70 percent of GDP.
Note how the debt plummets if we just let the current laws — the mandated spending cuts and expiring tax cuts — take effect.
I don’t think that’s the best course here, and it would certainly hurt the economy for the next couple of years — or longer.
But going over the “cliff” has some upsides.