House Speaker John Boehner’s (R-Ohio) latest budget proposal, known as Plan B, failed to gain enough support among Republicans in the House for a vote during an emergency meeting held Thursday night on Capitol Hill.
Speaker Boehner’s earlier prediction on Wednesday that Plan B would win approval in Congress and, consequently, place more political pressure on President Barack Obama and the Democratic controlled Senate to avert the looming “fiscal cliff” at the end of month, took the same course of the Mayan apocalypse prediction, incorrectly forecasting the end of the world on December 21st, the shortest day of the year.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass”, House Speaker John Boehner (R-Ohio) said in a short statement. “Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff. The House has already passed legislation to stop all of the January 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation’s crippling debt. The Senate must now act.”
Plan B was Speaker Boehner’s own compromised proposal that would have allowed higher tax rates from 35 percent to 39.6 percent for wage earners on annual income above $1 million, a provision that was a taboo for conservative Republicans at the base of the Republican Party who have been fighting “tooth and nail” to avoid any political measure that brings about higher taxes for the wealthiest earners.
Under “Plan B” Speaker Boehner agreed to increase his total tax revenue total to $1 trillion over 10 years, compared to Obama’s $1.2 trillion proposal that was recently revised lower from $1.4 trillion.
Some of the tax revenue needed to reach Boehner’s $ 1 trillion target, besides raising tax rates for earners over $1 million, would be accomplished through re-writing the tax code in 2013 and by slowing the inflation adjustments made to tax brackets, a move that many Democrats are reluctant to support.
Earlier in the week, Boehner’s office said that Plan B would represent a $3.9 trillion tax cut.
Plan B would have blocked the sequestration of automatic cuts across the board in domestic spending and defense.
In addition to extending the Bush era tax rates for nearly all Americans, except wage earners who earn above $ 1 million a year, Plan B maintains the current rules on the estate tax.
It also freezes the 15% tax rate on capital gains and dividends for Americans earning less than $1 million.
Boehner’s Plan B included a provision that riled many conservative Republicans by removing a key future bargaining chip to raise the debt ceiling in the government’s borrowing cap to help fund government spending for one year in exchange for Obama agreeing to $1 trillion in cuts from government medical benefit programs such as Medicare and a smaller inflation adjustment for Social Security benefits.
Following the outcome of Thursday’s meeting with Republicans, there will be no votes to avert the “fiscal cliff” until after Christmas recess next week during a shortened week.
If no compromise is reached before January 1, 2013, over $ 600 billion in automatic spending cuts and tax increases are set to kick in.
Before the Thursday evening meeting ended on Capitol Hill a vote was taken to cancel the military cuts related to the automatic sequestration spending cuts that will begin in 2013 if the “fiscal cliff” is reached. The vote narrowly passed 215-209.
By failing to capture enough votes to pass Plan B, House Speaker Boehner (R-Ohio) is now left struggling to unite a divided Republican House that remains committed to rejecting proposals that involve compromises with rising revenues and higher taxes to help pay down $16.4 trillion dollars in U.S. debt.
Republicans are left with the growing perception that they lack the necessary leadership to lead the United States on fiscal matters while still trying to convince the American public that they got the presidential election all wrong in November and the true path towards a healthy economy and lowering over $16 trillion in deficits comes exclusively through tax cuts and reduced government spending.