The House recessed last night after Speaker John Boehner (R-OH) canceled a vote on his proposal to break the “fiscal cliff” impasse by extending the Bush tax cuts for everyone except those earning incomes above $1 million.
Unable to convince enough fellow Republicans to support the proposal (dubbed Plan B) after many hours of debate on the measure House Majority Leader Eric Cantor (R-VA) notified the House that its business was finished for the week. The House will reconvene next week after Christmas.
The return a stalemate condition last night marked a stark contrast to what appeared to be a steady march toward some form of at least a short-term agreement. After returning to blustery rhetoric and dueling press events last week, this week began with a guarded sense of optimism that a deal could be put together. Both sides had introduced proposals that seemed to pave the way for a compromise solution.
President Obama indicated a willingness to accept spending cuts of $1 billion including some reductions to entitlements by changing the way inflation was calculated for COLAs. He also signaled that he was willing to set the income level for tax increases at $400,000, up from his previous proposal of $250,000. While he backed off from an earlier proposal to extend the temporary cut in the payroll tax, he called for extending unemployment benefits. He also proposed new stimulus spending on infrastructure programs.
For his part, House Speaker John Boehner (R-OH) reversed his objection to any tax increase and indicated he was willing to accept tax rate increases for incomes of $1 million. He also reportedly was willing to accept increase in the capital gains tax from 15 percent to 20 percent. His plan would also permanently fix the Alternative Minimum Tax. But he called the president’s proposal on spending cuts lacking sufficient detail and rejected any additional stimulus spending.
But, by midweek the optimism began to erode. Boehner decided to press for two votes in the House: one to cancel sequester and the other on a tax proposal. To cancel the across-the-board cuts (sequester) for defense and nondefense spending on January 2, 2013, Boehner proposed cutting mandatory spending by $300 billion over 10 years and nondefense discretionary spending by $19 billion in 2013. On taxes, he proposed raising taxes on incomes above $1 million and extending the Bush tax cuts for everyone else.
The administration immediately issued a Statement of Administration Policy stating the president would veto the spending bill and Senate Majority Leader Sen. Harry Reid (D-NV) said the Senate would not take up the bills if they were passed in the House.
Yesterday, the House narrowly passed the spending bill (215-209). But then Boehner canceled the vote on the tax bill and sent the House home for the Christmas holiday. The Senate will recess today. When Congress returns on December 27th, less than a week will remain until we go over the “fiscal cliff.” So, after a month-long lame duck Congress roller coaster ride, we are once again on the brink of going over the “fiscal cliff.”
Can some short-term deal be reached in time? Although there is still strong disagreement as to what the deal should look like, almost everyone, including most in Congress, is hoping for some sort of agreement. And, one could argue that the parameters of a deal have been laid out by the president and Speaker Boehner and that they are within reach of a deal. So, there would seem to be enough time to strike a deal.
The real question is: Can the president get support for a deal from enough Democrats and can Boehner get enough Republicans to vote for a deal?