Time for Plan B on 'fiscal cliff?'

Published on NewsOK Modified: December 14, 2012 at 6:28 pm •  Published: December 14, 2012
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WASHINGTON (AP) — It's beginning to look like it's time for Plan B on the "fiscal cliff."

With talks between President Barack Obama and House Speaker John Boehner apparently stalled, the leading emerging scenario is some variation on the following: Republicans would tactically retreat and agree to raise rates on wealthier earners while leaving a host of complicated issues for another negotiation next year.

The idea is that House GOP leaders would ultimately throw up their hands, pass a Senate measure extending tax rates on household income exceeding $250,000, and then duke it out next year over vexing issues like increasing the debt ceiling and switching off sweeping spending cuts that are punishment for prior failures to address the country's deficit crisis.

It's easier said than done.

For starters, that scenario has a lot more currency with Senate Republicans, who wouldn't have to vote for the idea after it comes back to the Democratic-controlled Senate, than with leaders of the Republican-controlled House, who would have to orchestrate it and who still insist they're not abandoning talks with the White House and that they're standing firm against raising tax rates.

"I think it's time to end the debate on rates," said Sen. Richard Burr, R-N.C. "It's exactly what both parties are for. We're for extending the middle-class rates. We can debate the upper-end rates and what they are when we get into tax reform."

"I think we end up with something like this Plan B," said GOP lobbyist Hazen Marshall, a longtime former Senate aide. "They probably figure out something on the rates by the end of the year but on everything else negotiations just continue."

House Republicans have yet to embrace the idea.

"There are literally dozens and dozens and dozens of members out there who have various ideas for how they could endgame this, or Plan B type scenarios, but none of that is under active discussion or consideration by the leadership," said Boehner spokesman Kevin Smith.

White House spokesman Jay Carney said Obama was still pursuing a broader deal with Boehner that didn't simply address the expiring tax rates, but also more revenue and spending reductions with a goal of reducing deficits. But he said that was out of reach if House Republicans refused to let the top rates rise for wealthy earners.

"It is still their position, as they tell you when you ask them, that they want extension of the high-end Bush tax cuts. That is not going to happen," Carney said. "The president will not sign such legislation."

Don't underestimate the explosion that giving in to Obama could create in GOP ranks, however. Republicans have been adamantly opposed to raising marginal tax rates, even as they now say they're willing to raise $800 billion or more in new tax revenues by closing loopholes and deductions. For months, the GOP mantra has been that raising tax rates will cost jobs, especially among businesses that would be affected. Some 94 percent of America's businesses are structured so that profits go directly to partners or shareholders who report the income on their individual tax returns.

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