President Obama has made a counteroffer to Speaker Boehner that puts the two men within shouting distance of a deal that Boehner could present to his caucus. But much shouting — or at least much negotiating — remains before such a deal could be finalized. With that in mind, Boehner appears to be seeking whatever incremental leverage might be had.
On the dealmaking side, Obama now says he will settle for raising taxes only on those making more than $400,000 per year. For Boehner, the magic number is $1 million. Obama now says he will settle for $1.2 trillion in new revenue, although Boehner reportedly thinks that the president’s details show him seeking $1.3 trillion, in reality. This is down from $1.4 trillion.
On the savings side, Obama apparently would agree to a less expansive measure of the cost of living that would save $225 billion over the next decade, about half of it in Social Security savings. He would also agree to additional spending cuts and to end the payroll tax holiday. Obama still clings, however, to his demand of new stimulus spending, to the tune of $80 billion.
Finally, Obama wants a two-year respite from having to negotiate over a debt ceiling increase. Boehner has offered him one year.
The bottom line for Boehner appears to be $1 trillion in new revenue and $1 trillion in spending cuts/savings. Obama is $200 to $300 billion north of that figure in terms of revenue and south by perhaps a bit less in terms of spending/savings.
On the leverage side, Boehner met today with his caucus to report on the status of negotiations and to try to sell the idea of tax increase on “millionaires.” No doubt, the idea met with plenty of resistance. Thus, I imagine, Boehner can now tell Obama that the best House Republicans can do is to increase the rate for “millionaires.”
To reinforce this message, Boehner has announced that House Republicans will move their own bill that would hike tax rates on income above $1 million. This is the long awaited “Plan B.” Boehner explained:
The White House just can’t seem to bring itself to agree to a ‘balanced’ approach, and time is running short. Taxes are going up on everyone on Jan. 1. They’re baked into current law. And we have to stop whatever tax rate increases we can. In the absence of an alternative, as of this morning, a ‘modified Plan B’ is the plan.
Until now, Democrats have had plenty of leverage in the fiscal cliff talks. But compared to Boehner, Obama has less of the incremental leverage that comes from fear that he can’t sell a deal to his “constituents.” That’s a downside — one of the few — of having a Party that, for now, marches largely in lockstep.