‘Fiscal cliff’ plans stall as Republicans push own plan
REPUBLICANS in Congress pushed ahead with a "fiscal cliff" plan on Thursday that stood no chance of becoming law as time ran short to reach a deal with President Barack Obama that would avert a Washington-induced economic recession.
The Republican-led House of Representatives plans a Thursday evening vote on Speaker John Boehner's "Plan B" to limit income-tax increases to the wealthiest sliver of the population in order to pressure Obama to offer more concessions.
"Time's running short. I'm going to do everything I can to protect as many Americans from an increase in taxes as I can," Boehner said at a news conference.
Obama has vowed to veto the plan, and Senate Majority Leader Harry Reid said he will not bring it up for a vote in the Democratic-controlled chamber. White House spokesman Jay Carney called it a "multi-day exercise in futility."
Still, passage of Plan B could give Boehner the political cover he needs to strike a deal that would break with decades of Republican anti-tax orthodoxy.
Though it does not raise taxes on as many affluent Americans as Obama wants, it would put Republicans on record as supporting a tax increase on those who earn more than $1m per year - a position the party opposed only weeks ago.
That could make it easier to eventually split the difference with Obama, who wants to lower the threshold to households that earn more than $400,000 annually. Obama also faces resistance on his left flank from liberals who oppose cuts to popular benefit programs, which Republicans say must be part of any deal.
Obama and Boehner will need to engage in more political theatre to get lawmakers in both parties to sign on to the painful concessions that will have to be part of any deal to avert the cliff and rein in the national debt, analysts say.
"They are now in the mode where they have to demonstrate how hard they're trying to get everything they can," said Joe Minarik, a former Democratic budget official now with the Committee For Economic Development, a centrist think tank.
Even as he pressured Obama and the Democratic Senate to approve his plan, Boehner indicated that he was not willing to walk away from the bargaining table.
"The country faces challenges, and the president and I, in our respective roles, have a responsibility to work together to get them a result," Boehner said.
TIME RUNNING OUT
Obama and Boehner aim to reach a deal before the end of the year, when taxes will automatically rise for nearly all Americans and the government will have to scale back spending on domestic and military programs. The $600 billion hit to the economy could push the U.S. economy into recession, economists say.
Investors so far have assumed the two sides will reach a deal, but concerns over the fiscal cliff have weighed on markets in recent weeks. The S&P 500 index of U.S. stocks was up 0.4pc n Thursday trading, despite a round of strong data on economic growth and housing.