Time for Plan B on ‘fiscal cliff?’

WASHINGTON — 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.

Don’t underestimate the explosion that giving in to Obama could create in GOP ranks. 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.

Moving to Plan B would also mean that one side in the Obama-Boehner talks would have to throw up their hands and leave the bargaining table.

“Listen, we have never changed our posture. We remain willing, desirous of talking with the White House, of being specific with the president about how we address the spending problem,” said House Majority Leader Eric Cantor, R-Va.

The counter view is that even tea party Republicans like Sen. Rand Paul, R-Ky., are resigned to the fact that Obama simply won’t yield on rates and that a tactical retreat would allow Republicans to rejoin the battle when it comes time to pass must-do legislation to increase the government’s borrowing cap early next year.

That approach requires House Republicans to retreat in a fashion similar to the way majority Democrats relied on Republican votes when finessing must-pass bills to fund military operations in Iraq and Afghanistan under President George W. Bush. That would mean structuring floor debate to allow the Obama-backed tax hike to pass mostly with Democratic votes.

But the need for Democratic votes means Republicans might have to resist the temptation to add GOP sweeteners to the measure like a more generous extension of the estate tax than Obama likes or to keep tax rates on investment income from rising from 15 percent to 20 percent as the Senate bill would do. Democrats would probably take their lead from Obama if Republicans sought to power such proposals past them — and if they resisted, Plan B could implode.

Democrats say they’d likely go along if the House simply passed the tax bill the Senate passed in July and left other fiscal cliff items on the table.

More in Local News

If vehicles crash and tumble, rescuers want to be ready

The Puyallup Extrication Team practiced with other fire departments on cars, SUVs and even buses.

Man arrested after stolen car crashes in Everett

The accident occurred in the 100 block of SE Everett Mall Way.

5-vehicle crash in Arlington kills 62-year-old woman

Medics had transported her to the hospital, where she later died.

2 men hospitalized after rollover collision on U.S. 2

Two men were taken to the hospital with minor injuries… Continue reading

Marysville police serve a warrant — across the street from HQ

A man who fled was taken into custody. Police were serving a warrant for alleged drug-related crimes.

Marysville man charged with stabbing wife who sought divorce

Nathan Bradford, 45, found divorce papers while going through the woman’s car.

Man on ferry accuses child of theft, allegedly pulls knife

The man was arrested, no one was hurt, and the ferry was delayed 30 minutes on its way to Mukilteo.

Coming together as family

Special-needs students and teachers at the Transition Center cooked up a Thanksgiving feast.

Lynnwood’s property tax promise to homeowners sort of true

They were told consolidation of fire departments would save, but new rates likely will be more.

Most Read