How ‘Plan B’ Scrambled Fiscal Cliff Negotiations

December 19, 2012 1:01 pm

The clearest indication that House Speaker John Boehner’s final fiscal cliff ploy backfired came late Wednesday when he began modifying his so-called Plan B.

Plan B, recall, is legislation to lock in the Bush tax cuts for all incomes up to $1 million — a fallback plan he hopes will strengthen his negotiating hand with President Obama.

But late Wednesday, faced with a daunting whip count, Republican leaders did two things. First, they began entertaining the notion of tacking spending cuts on to the bill — to entice skeptical House conservatives to provide badly needed votes. (Their skepticism is understandable: Why should they vote for legislation designed to strengthen Boehner’s hand in deficit reduction negotiations they don’t support in the first place?)

Second, and crucially, they scotched a tandem plan to vote down legislation, supported by most Democrats, extending the Bush tax cuts for income up to $250,000.

That was the biggest tell of the day: Boehner can’t deep-six that bill, because he may need to pass it –with help from Democrats — if fiscal cliff negotiations with Obama fall apart completely.

All of this developed against a backdrop in which Obama and Boehner are substantively very close to a deal. So why all the chaos?According to both parties, things began unraveling late Monday, after Boehner informed Obama he’d be introducing Plan B on Tuesday morning. Though Obama’s latest offer would cut as much from federal spending as it would raise in taxes, Boehner declined to count savings from reduced interest payments on the national debt toward Obama’s spending cut total. To satisfy Boehner, Obama would need to pony up about $300 billion in additional spending cuts — most likely to federal health care programs.

But to force Obama’s hand, Boehner needed leverage, and Plan B was intended to provide him with it. Dangle the threat that Republicans would allow the Bush tax cuts to expire for income over $1 million, and Obama might move in Boehner’s direction — better that than swallow Plan B’s half measures, or share blame for going over the fiscal cliff.

It didn’t work. Obama has threatened to veto Plan B, and at a White House press conference on Wednesday, he excoriated Boehner and the House GOP for refusing to negotiate in good faith.

“[F]rankly, up until about a couple of days ago if you looked at it, the Republicans in the House and Speaker Boehner, I think, were in a position to say we’ve gotten a fair deal,” Obama said. “The fact that they haven’t taken it yet is puzzling, and I think, you know, a question that you’re going to have to address to them. … I think anybody who looks at this objectively will say that coming off my election, I have met them at least halfway in order to get something done for the country.”

Obama’s intent was clear: He isn’t moving in Boehner’s direction — at least not as much as Boehner would like. Which means if Boehner fails to pass Plan B, he’ll only have bad options to choose from. To his right, there’ll be the fiscal cliff, and to his left there’ll be Obama’s outstretched hand. Which brings us back to his decision to hold fire on legislation extending the Bush tax cuts to income up to $250,000.

If Plan B fails, and he doesn’t want to cut a big deficit reduction deal with Obama and he doesn’t want to go over the cliff, settling for a more modest measure where income tax rate go up on only those with incomes above $250,000 will be his only remaining option.

Not surprisingly, Democrats are heavily invested in Plan B’s failure. They want to beat Boehner at his own game, yes, but they also don’t want him to secure this last bit of leverage and potentially win yet more concessions from Obama at the last minute. And on top of that, if it fails, but secures scores of Republican votes along the way, it tells everyone — in both parties — something very important.

If 100 or 150 Republicans vote for Plan B on its way to failure, that’s 100 or 150 Republicans who’ll be half-pregnant having voted, for the first time in decades, on legislation that effectively raises taxes. And that would say a lot about how many Republicans might ultimately vote for a bill — any bill — to raise taxes and avoid the fiscal cliff.

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