During the fiscal cliff negotiations, President Obama seemed to have the upper hand on taxes … until now.
House Speaker John Boehner put forward a “Plan B” on Tuesday morning to stop the automatic tax rate increase slated for next year. The maneuver appears designed to prod Obama into a deal that’s closer to their terms – or give GOP lawmakers political cover should talks with the White House sour.
Negotiations to avoid the fiscal cliff are still ongoing. Both sides are laboring to forge an agreement that trims the deficit by $4 trillion over the next decade that would also include cuts to entitlement programs such as Medicare. Over the past several days, the differences between the two sides have narrowed, but the new alternative on taxes gives Republicans a much stronger hand than what they had just hours ago. Read more at The Fiscal Times
WHITE HOUSE REJECTS PLAN ‘B’ The Republican proposal, known as Plan B, was part of a political dance by both parties to try to spin the narrative in their favor even as they edged closer to agreement. The White House rejected the offer but remained confident of an agreement after both sides made compromises in recent days.
"The president has demonstrated an obvious willingness to compromise and move more than halfway toward the Republicans," White House spokesman Jay Carney told reporters, adding that Obama is making a "good faith" effort to reach a compromise.
While a bipartisan bargain could still fall apart, hopes of an accord rose on Monday night after Obama made a concession to Republicans by offering to limit tax increases to incomes exceeding $400,000 per household. That is a higher threshold than the $250,000 he had sought earlier. Read more at The Fiscal Times
MARK THOMA ON FED POLICY AND BIG GOVERNMENT Monetary policy took an important step forward last week when the Federal Reserve made it clear that unemployment would receive more weight in its policy decisions, and inflation would be less of a priority. The Fed has not, by any means, abandoned its commitment to price stability. But it is more willing than it has been in the past to remain focused on the unemployment problem even if inflation drifts temporarily above its target value.
There is always room for the Fed to do better. I would like, for example, to see even more tolerance for inflation as we try to reduce the unemployment rate. But the Fed is clearly reassessing its policy procedures in light of the experience of the Great Recession, and making changes to try to improve its current and future policy performance. - Read more at The Fiscal Times
ANOTHER SCRIMMAGE BEFORE THE BIG GAME Yet another face-to-face bargaining session between President Obama and Republican House Speaker John Boehner on Monday fueled speculation that a budget and tax deal to avert the fiscal cliff may be at hand.
The 45-minute session at the White House marked the third conversation between the two leaders in the past five days and came after Boehner made two breakthrough concessions: One paves the way for raising tax rates on the wealthiest Americans, as the president has insisted, while the other would grant the Treasury additional borrowing authority next year without another partisan dust-up about raising the $16.4 trillion debt ceiling.
The New York Times reported that President Obama delivered a new plan in response to these concessions that includes raising revenues by $1.2 trillion over 10 years and keeping the Bush-era tax rates in place for households making less than $400,000. Obama is also insisting that debt-ceiling negotiations be tabled for two years, not the one year that Boehner offered. Read more at The Fiscal Times