The Right Opinion

Plan B

By Rich Galen · Dec. 19, 2012

We're now within 10 legislative days 'til the Fiscal Cliff – assuming the Members won't be decking the Halls of Congress with boughs of holly on Christmas Eve and Day.

There is movement in the positions coming from either end of Pennsylvania Avenue. The President campaigned successfully on the idea of raising taxes on the wealthy – with the wealthy being defined as any family earning $250,000 or more annually.

This is an untenable position with many union workers as with most government employees – two huge portions of President Obama's coalition. In the modern era of two working adults in a typical household, that $250,000 threshold isn't as lofty in major cities like Our Nation's Capital as it might be in places like Marietta, Ohio 45750.

The President carried major cities. I don't think he carried Washington County, Ohio.

So, the White House is, according to the Associated Press, “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,” to between $1.2 and $1.3 trillion.

House Speaker John Boehner's position had been that there should be no tax rate increases on anyone, but has now determined that he could accept a $1 million per year income as the floor for higher taxes which the AP wrote “would raise about $1 trillion in taxes over 10 years.”

There's no question that a million a year qualifies anyone as being “wealthy” with the possible exception of a minor Prince living in Riyadh, but it is not likely that will be the final number.

The betting here at Mullings Central is that the number at which higher tax rates will kick in will be closer to the Obama level than the Boehner level – probably between $450,000 and $500,000 per year for taxpayers filing jointly – about halfway between zero and a million dollars.

The NY Times also noted that the President's proposal would “cut $930 billion in spending” over the 10 years at issue, which the Speaker called “unbalanced” meaning the proposal raised taxes more than it cut spending.

Democrats immediately dismissed the Speaker's position (as did the hardliners on the right in Boehner's Conference).

Nancy Pelosi, the House Minority Leader, called it “dead on arrival” which apparently raised no eyebrows for insensitivity among Capitol Hill Reporters given the events of Friday morning.

The Speaker's office has indicated that a bill to retain the Bush-era tax cuts on everyone making less than a million a year might come to the House floor on Thursday.

However, it does not deal with the spending side leaving in place the “sequester” cuts that would, according to people to appear to know about these things, have a significant detrimental effect on the Pentagon.

The NY Times' Jonathan Weisman quoted Ohio Republican Senator (and oft-mentioned running-mate to Mitt Romney) Rob Portman as saying the “Pentagon cuts would damage not only military readiness but also the fragile economy.”

Part of the game of legislative chicken that is being played is shown by how the two sides are portraying this.

The House may vote on a bill that includes the Senate language raising taxes on the original $250,000 income earners which will fail.

That will show that the President's plan cannot pass the House.

The House will then vote on the $1 million dollar plan and, presumably, it will pass.

But, Senate Majority Leader said yesterday afternoon that the Senate will not consider a bill that starts the tax increases at $1 million in income, so the Speaker's plan can't pass the Senate.

If it can't pass the Senate, White House Press Secretary Jay Carney said, the House, “will not protect middle-class families” because everyone's taxes will go up.

I have been wrong about just about every political prediction I have made in recent history. I thought the “Super Committee” would succeed. It did not which is what has led us to this situation – it was the self-inflicted punishment the Congress threatened in case of failure.

I am going to go out on a limb again – and will probably be wrong again.

Plan B might not pass, but Plan C or D, or Q will find its way to the floors of the two Chambers before December 31 and will pass.

Then we'll start the process of a long-term solution with fresh faces in the House and Senate on January 3 and a newly-inaugurated President on January 20.

I hope I'm correct for once.

On the Secret Decoder Ring today: Links to the AP, the LA Times and the NY Times stories.

Also a very interesting Mullfoto of the Washington Monument from last week.

Copyright ©2012 Barrington Worldwide, LLC | Mullings.com

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4 Comments

Dave in SoCal said:

Rich - I'll buy the first part of your prediction. Something will be done to avoid going over the fiscal curb. The Republicans can't stand the thought of being blamed for that should it occur.

I am not so optimistic about any serious discussion of how we avoid the real fiscal cliff looming in the future. I predict more of the same. Like an alchoholic, we will need to hit rock bottom before we accept the errors of our ways and can begin a change in direction.

It's not about the people in Washington. They are not the problem. They are merely a symptom of the problem. The problem lies with the voters who either don't understand, or, not wanting to give up any of their entitlements, are too selfish to do the right thing for the country.

Wednesday, December 19, 2012 at 9:54 AM

sfj in Alabama said:

Actually, the military needs a good trimming. I work for DOD and see the "fraud, waste and abuse" daily. However, I doubt that any significant cuts will occur because of the juice defense contractors have with politicians. The american public (for the most part) don't know/care about budgets, spending or anything else to do with the problems America is encountering. As long as they get their "check" and have the latest electronic toy - phones, tablets, etc - to play with, they're happy. But they'll be the first cry and complain when the collapse finally hits.

Wednesday, December 19, 2012 at 11:20 AM

Tad Petrie in Westerville, OH said:

Well Rich, don't feel too bad about blowing the call on the Super Committee, I blew the call on Rob Portman when I voted for him, I had no idea just how INCOMPETENT Portman is until the Super Committee happened! I actually had hope when Boehner became the Speaker, but after 2 years of compromising on command from the White House and NOT impeaching the President for the crimes he's committed since taking office, we can plainly see that John Boehner is INCOMPETENT and a COWARD! Rest assured a plan will pass; it will contain everything the President wants, the only possible exception of the blank check to raise the debt ceiling. In which case, I would imagine that given the President’s contempt for the Constitution, he’ll do it by Executive Order and Boehner will let him get away with it!

Wednesday, December 19, 2012 at 11:28 AM

Wayne in Hinesville, GA said:

Let's face it, a portion of the electorate in this country live beyond their means and it doesn't bother them that the government is doing the same. The huge difference is an individual can file bankruptcy and start over but the government can't do that. People are like the Senate, they haven't found a budget they can live with so they don't have one. One of the major problems is the massive amount of money we spend on welfare programs every year. The lazy parasites will surely never be asked to give up any of their benefits because then they might not vote for the Demorats. I foresee military retirees, those receving Veteran administration compensation, and Medicare recipients losing some of their compensation by either cutting spending or not raising compensation in the next four years. This will be the Demorats way of being "fair" in distributing the wealth around.

Wednesday, December 19, 2012 at 12:12 PM