Yet Another Update: My colleague Chye-Ching Huang shows you in graphs what’s wrong with Plan B: compared to the allowing the rates on the top 2% to expire (and freezing the rest), it actually delivers more after-tax income to the $200K and up households and less to everyone else. It also raises less than half the revenue that even Rep Boehner said he was for. As I just said in an interview with a Spanish radio station, “Plan B es mui malo” (beyond that, I needed–and had–an interpreter).
Update: Yikes! The good wonks at the Tax Policy Center find that because it gets rid of a bunch of stuff currently helping low- and middle-income households e.g., parts of the child tax credit and earned income credit), Plan B raises taxes on all income groups from the poorest up to 200K (as well as millionaires, of course). This thing is legislative toast and a waste of everybody’s valuable time.
There’s not much to say about Rep Boehner’s plan B…neither Senate D’s nor the White House would accept it so it’s just theatrics–and this is a very unfortunate time for theater.
The plan would extend all the Bush tax cuts up to $1 million and that’s pretty much it…no debt ceiling agreement, nothing on sequester, no “doc fix” (cuts Medicare reimbursements by almost 30%), no extended UI.
Relative to the President’s most recent offer, it’s actually a tax cut even for millionaires, because their income between $400k and $1 million would be taxed at lower rates. According to a “preliminary estimate” by the WH, it would raise $300 billion in revenue over 10 years, way less the Boehner himself has offered in recent negotiations ($800 billion).
Enough said about all that–what’s of concern here is the thing I’ve been worrying most about in recent days: as we get closer to a plausible deal (unlike this Plan B), can Rep Boehner deliver the votes from House R’s? I’ll have more on that later today, but this little Plan B foray amps up my concerns. From Jon Chait:
…Boehner isn’t going to get a chance to make his plan work, because Republicans themselves have revolted against it. Heritage Action, the conservative “think tank,” is planning a public denunciation. It is being openly denounced by such luminaries as Marco Rubio and Jim Jordan. Robert Costa reports in National Review that the plan may be dead on arrival. “A lot of us don’t trust Boehner right now,” one House Republican tellsThe Wall Street Journal editorial page…
…the conservative revolt shows something important: Boehner does not have control over his own caucus. Obama is trying to cut a deal with Boehner, and he may succeed, but in all likelihood such a “success” would lead to a reprise of the 2011 negotiations, when House Republicans threw the deal back in Boehner’s face…
I remember that well. Things are moving quickly, and Rep Boehner’s worked harder in this go-round to hold his troops together. But we’ve yet to see much evidence that it’s working and that could totally queer the deal.
I saw this B thing as a statement that this is all they can do. At least until January. See my comments on the last post about these “negotiations”: what are the incentives for individual GOP House members to vote to raise taxes, to raise the debt ceiling, to cut defense, etc.?
>>could totally queer the deal>>
Given my dissatisfaction with the Obama’s current proposal, I’m not sure this is a bad thing.
As recent polls show, the public overwhelmingly supports raising taxes on incomes over $250,000 and overwhelmingly opposes cuts in Social Security (including chained CPI), Medicare and Medicaid. I don’t see any good reason Obama should give on these points.
Setting the stage for another debt ceiling crisis in two years is not a very good idea, especially since his political capital will be lower at that time and because the GOP sees his negotiating strategy as a sign of weakness they will try to exploit. Obama’s statement that he will not negotiate the debt ceiling is not credible in light of his movement on taxes over $250k, etc.