Just two weeks before the economy-threatening "fiscal cliff" is due to kick in, House Speaker John Boehner opened up a second legislative track to stop tax hikes from kicking in on Jan. 1 for people making up to $1 million a year.
Boehner aides said the call for a separate tax bill, which the speaker presented to his caucus Tuesday morning, does not mean the Republican is cutting off negotiations with President Barack Obama on averting the full slate of tax hikes and spending cuts due to take effect next year. Obama and Boehner have each made significant concessions in recent days, signaling a new stage in the negotiations.
Boehner's latest move is an attempt to give Republicans political cover if Washington fails to reach a deal before the end of the year and taxes increase on all income earners. The White House had no immediate response to Boehner's 'Plan B' proposal, but has previously rejected his attempts to extend tax cuts for families making up to $1 million.
However, the president has dropped his long-held insistence that taxes rise on individuals earning more than $200,000 and families making more than $250,000. He is now offering a new threshold of $400,000 and lowering his 10-year tax revenue goals from the $1.6 trillion he had argued for a few weeks ago.
Obama and Boehner met privately at the White House on Monday, and then spoke again on the phone later that night. Boehner huddled with House GOP members on Capitol Hill Tuesday morning to discuss the status of the talks and review Obama's latest offer.
"We have to stop whatever tax rate increases we can," Boehner said in the meeting, according to prepared remarks released by an aide. "In the absence of an alternative, as of this morning, a "modified Plan B" is the plan."
Unless Congress acts, tax rates will increase on all income earners on Jan. 1. Boehner first opposed raising rates on any income earners, including the wealthiest Americans, but agreed on Friday to accept an increase in tax rates for taxpayers who earn more than $1 million. Boehner's plan would raise about $1 trillion in taxes over 10 years.
In return, Obama also abandoned his demand for permanent borrowing authority. Instead, he is now asking for a new debt limit that would last two years, putting its renewal beyond the politics of a 2014 midterm election.
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