"Plan B" is dead; what's next for "fiscal cliff"?

House Speaker John Boehner's big idea for a backup "Plan B" exploded Thursday night when, after days of wrangling with his own troops, he realized he didn't have enough votes to pass the tax cut part of his plan.  With four days until Christmas and 11 until the effects of the "fiscal cliff" begin the big question today is: what happens now?

Obama and Boehner to talk?

Boehner sent House Republicans home for Christmas after last night's legislative collapse, ensuring nothing will be passed until Dec. 27 at the earliest, when members are due back in town.  That leaves Boehner and President Obama to keep negotiating - something that ground to a halt after Boehner announced he was moving forward with his "Plan B" earlier in the week. 

But the two are at a stalemate, even though they're not that far apart in their proposals. In their most recent offers, Mr. Obama was offering $1.2 trillion in revenue and $800 billion in spending cuts; Boehner was offering $1 trillion in revenue and $1 trillion in spending cuts.  Also, the president agreed to let the Bush-era tax cuts expire on those making over $400,000; Boehner is supporting a $1 million threshold, to the consternation of some in his party who don't want anyone's taxes to go up.

• Boehner: It's now up to Democrats to fix "fiscal cliff"
• House GOP pulls "Plan B" as fiscal cliff looms

The president is hoping to get to Hawaii for Christmas - he was planning on leaving town today but without a "fiscal cliff" deal, it's unclear whether he'll get to the Aloha State at all for the holiday.  Meantime, Boehner wakes up today with the realization that he has a seemingly irreparable schism within his own ranks: there are just enough Republicans who refuse to budge on taxes and are demanding more spending cuts, especially on entitlement programs such as Medicare, therefore gumming up the works for any progress Boehner wants to make on the "fiscal cliff".

Ultimately, negotiations between the president and Boehner might be over, especially since it's clear to all parties after last night that Boehner doesn't have the votes to get any compromise through the House.

Obama and Reid to offer a solution?

Boehner seemed to throw up his hands after calling off the "Plan B" vote Thursday night saying the solution to averting the "cliff" is in the hands of Mr. Obama and Senate Majority Leader Harry Reid, D-Nev.

"The House did not take up the tax measure today because it did not have sufficient support from our members to pass. Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff," Boehner said Thursday night in a written statement. "The House has already passed legislation to stop all of the January 1 tax rate increases and replace the sequester with responsible spending cuts that will begin to address our nation's crippling debt. The Senate must now act."

White House spokesman Jay Carney said in a statement tonight: "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. The President 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."

The Senate is in session today before recessing until Dec. 27; both the president and Reid will attend a memorial service for the late Sen. Daniel Inouye, D-Hawaii, so action between the two, if any, would begin this afternoon at the earliest.

Over the "cliff"?

The only way to reach a deal may be to let the nation go over the "cliff." When that happens, the expiration of the Bush-era tax cuts will mean that taxes on nearly all Americans will go up. That fact would seem to make it easier for House Republicans to back a "fiscal cliff" deal, since they would be voting for a tax cut, not a tax hike.

But going over the "cliff" could have significant consequences. To be clear, the "cliff" is actually more of a slope: The $1.2 trillion in automatic spending cuts are phased in over a decade - it's not the immediate punch to the cut that "cliff" implies - and there are budgetary maneuvers that can at least somewhat soften the blow of both the tax hikes and spending cuts. But going over the "cliff" could spook the markets and once again shake world perceptions of the ability of the U.S. government to function effectively. And if a deal is not reached relatively soon after the deadlilne, the $500 billion in tax hikes and $200 billion in spending cuts in the first year will likely start pushing the nation back into recession.

How will the markets react?

Many eyes will be on Wall Street to see how it reacts to the growing realization that the over the "fiscal cliff" scenario may be closer to reality than anyone hoped.

Things were not looking up early this morning: Asian markets across the board closed slightly down for the day after news of the "Plan B" withdrawal broke.

[RobertVBrand]

It's easy to fix Social Security. Remove the "cap" of $100,100 on SS taxes so the rich pay as much percentagewise as the middle class. But retain the cap on SS payout; anyone rich enough to be receiving the maximum gets most of his retirement elsewhere.

[quantum_analysis]

Modern republican leaders are well to the right of their predecessors, not to mention most American voters. In June, former Florida Gov. Jeb Bush said his father, former President George H.W. Bush, and Reagan would have a hard time being nominated by today's Republican activists.

Scores, if not hundreds, of House members focus more intensely on their home district's politics than on their national party's reputation. Many republicans from staunchly conservative districts fear a primary election challenge from someone to their right.

[quantum_analysis]

The collapse of Boehner's tax effort "weakens the entire Republican Party," said Rep. Steve LaTourette, R-Ohio, who is retiring after 18 years.

"It's the continuing dumbing down of the Republican Party," he said, "and we are going to be seen more and more as a bunch of extremists that can't even get a majority of our own people to support policies that we're putting forward. If you're not a governing majority, you're not going to be a majority very long."

[janelasdedeus]

We are like those beachcombers in Thailand a few years back, staring out at an approaching tsunami and too mesmerized to move. In our case it's a demographic wave, as the boomers are just beginning to retire and shall soon engulf the nation's economy in overwhelming debt to pay for their medicare and social security entitlements. Pathetically, absolutely none of our office holders dares to suggest that the old way out is to BEGIN to raise the age of retirement FOR THOSE UNDER 55. That would protect those who now need or will shortly need these programs, and give the rest time to prepare for this change. It's fair and reasonable, but anyone who suggest this approach will be demonized as cruel and heartless.

[usbworks]

Here's what happens now, according to David Frum, conservative Republican:

1) President Obama goes on holiday.

2) December 31 arrives.

3) Taxes go up on everybody. Unemployment insurance ends. Sequester begins to go into effect.

4) Screams, howls.

5) President Obama returns to Washington, speaks to country from Oval Office or else summons special session, unveils the "Obama Tax Cut and Job Creation plan" featuring a whacking big tax cut for 98% of Americans.

6) Plan polls at 70% or better.

7) Republicans resist.

8) Republicans surrender.

9) Economy recovers, "morning in America," Obama basks in glory in 2nd term.

[pcbynature]

Should the GOP kick out its Tea Party members?

[pcbynature]

What remains is this: non-Tea Party Republicans will have an opportunity to make a deal with Dems. That would give the GOP a chance to distance itself from the suicidal Tea Party subversives elected in 2010.

[TimeToEvolve]

Why write a plan Boner that is totally ridiculous and will make you caucus a laughing stock? No wonder a bunch of Republicons could not even vote for it. We need someone serious, with at least half a brain, to lead the House. Let's get real.

[YourRearViewMirror1]

Folks,

I just cannot wait for the GOP Cliff on Nov 4, 2014!

[AttyFAM]

tpaine1 said:
America voted for gridlock and with a new Tea Party House Speaker that's what we'll get.
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In 2012, considerably more Americans voted for Democratic House Representatives than voted for Republican ones. But there is a Republican majority, because Republicans control a majority of the state houses and have gerrymandered safe seats for a Republican majority.