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A REPUBLICAN PLAN to let tax breaks expire on US millionaires collapsed late yesterday when it failed to earn enough party support, leaving talks on averting the ‘fiscal cliff’ up in the air.
House Speaker John Boehner had boasted sufficient support for his “Plan B” to put pressure on President Barack Obama to break the stalemate over how to avoid the tax hikes and mandatory spending cuts set to kick in on 1 January.
But Democrats balked at the initiative, and conservatives opposed to raising taxes on anyone, even the wealthy, revolted. Boehner, who sought to use the vote as leverage in his talks with Obama, was forced to pull back.
“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner said in a statement late yesterday after calling a brief meeting with his Republican caucus.
“Now it is up to the president to work with Senator (Harry) Reid on legislation to avert the fiscal cliff,” he added.
House Majority Leader Eric Cantor said the House of Representatives now stood adjourned until after Christmas.
Boehner must now work with Obama and the Democrats, who control the Senate and could potentially shepherd a bill approved by moderate Republicans through the House, if he hopes to avoid the year-end fiscal cliff.
“Plan B… is a multi-day exercise in futility at a time when we do not have the luxury of exercises in futility,” White House spokesman Jay Carney said hours before the vote in the House.
“It cannot pass the Senate. The president would veto it.”
But shortly after Plan B crashed to defeat, Carney put out a more conciliatory statement, saying a “bipartisan solution” was still possible.
“The president’s main priority is to ensure that taxes don’t go up on 98 percent of Americans and 97 percent of small businesses in just a few short days,” Carney said.
Obama “will work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy.”
Boehner’s plan would have extended George W. Bush-era tax breaks for everyone apart from those earning more than $1 million a year and also redirect automatic spending cuts away from defense to other programs.
Republican leaders sweetened the deal by offering a companion spending cut bill, in a bid to win over deficit hawks who see government spending as the main driver behind the country’s $16 billion debt.
But the White House charged that the bill would offer big tax breaks to wealthy Americans earning less than $1 million who do not need them.
Obama had originally insisted on letting tax cuts expire on households earning more than $250,000, but has since upped the threshold to $400,000 in a bid to reach a compromise.
Boehner’s tactics have mystified many in Washington, with some wondering whether he can sell any deal with Obama to his restive caucus.
The speaker has faced intensifying opposition from conservatives who oppose raising any tax rates, arguing that doing so would slow economic growth.
Democrats saw the failed vote as proof that only a bipartisan deal has any hope of averting the automatic tax hikes and spending cuts.
The White House insists the two sides are not that far apart, and Obama has compromised on Social Security retirement benefits and tax rates in ways that have angered liberal supporters.
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$16 billion debt do you not mean trillion?
There in so much debt they are basically bankrupt . However if America fails the world is in trouble so money is still lent to them without question
America has massive debt yet they are turning their economy around. Private debt is falling rapidly, American corporations are sitting on record cash piles and the housing market is starting to pick up.
The dollar has problems but people look at it and then look at the dud Euro and they flee stateside with their money.
Stephen, you don’t know what you are talking about. The EUR/USD rate today is slightly higher than it was 12 months ago and has actually risen consistently over the last six months. Far from fleeing stateside with their money currency investors seem to be quite happy with holding Euros.
Actually Jim, you are the one who is clueless. The EUR/USD is high – so what? The Fed is printing money. Stephen is quite right in pointing out the challenges faced by the US are insignificant compared to those faced by Europe. That’s why Merkel is calling for 5 more (or is it 10?) years of austerity.
Just read the headline and thought this was about the rapper from the UK entering US politics :-)
I hear Biffo & Bertie are looking for a nixer.
Is there a comedy about a drunk and a weasel coming up in Tinsel town.
Even the very wealthy in the states ie Warren Buffet saying its wrong that the wealthy can in a lot of cases pay less tax than the workers just earning above the minimum payment. Now the Republicans are showing their true colours and greed now.
That’s why they have failed in the last two elections. There is more to politics than serving the wealthy and powerful.
Their greed was never in question. Why people vote these people in though I don’t know.
FACT
As sovereign issuer (out of thin air) of it’s own fiat, free floating currency, the US government has no need whatever to ‘borrow’ or pay interest to anyone in order to spend in its own currency.
The entire ‘fiscal cliff’ issue is an ideologically motivated scam perpetrated by the top few percent (& their ignorant ‘useful idiots’) on the rest of society.
The financial sector are simply buying the politics (massively funding both main parties) they require to continue the privilege granted to them by government to introduce all new money exclusively as debt in their favour. Such that they may may also continue their periodic boom & bust Pyramid schemes.
Boehner had electile dysfunction.
The Dollar will be a safe haven as the US has the means and will to defend its sovereignty.
Im glad obamas war on the rich is failing
Yer wha?
It’s the ultra wealthy’s war on everyone else that’s the problem here, per Warren Buffet (and he would know):
“There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”
The growing divide between the “masters of the universe” and everyone else isn’t in anyone’s interest, not least the 1%, it’s about time people woke up to this:
http://www.vanityfair.com/politics/2012/05/joseph-stiglitz-the-price-on-inequality
The only class warfare is the scroungers flying the flag of socialism and using it as a shield to defend them robbing from honest ‘rich’ people and companies.
In case you’ve been asleep for the past five years, in this country it’s more a thing of “rich” companies, i.e. banks, robbing from honest working people. And what are we getting in return? That’s “scrounging” on the grand scale.
Think it might be in your own best interests to have a good close look at the reality behind the “47%” type propaganda you seem to be buying into, as well as learning what socialism really means.
I think Stephen is being a bit of a windup merchant here. I certainly got a good belly laugh out of his “thesis”.
Capitalism – en economic system based on free trade in which some people get rich and some remain poor
Socialism – an economic system based on government control and regulation in which people are harshly punished by taxes for having the audacity to try to work hard and not be poor. Also where doing nothing grants you a wonderful life of government protection and free money at working peoples expense
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