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Democrats in Congress Say Boehner Must Seek Bipartisan Plan

December 21, 2012

House Speaker John Boehner

Late yesterday, Boehner scrapped his plan to allow higher tax rates on annual income above $1 million because he lacked the votes in his Republican caucus to pass it. Photographer: Andrew Harrer/Bloomberg

Democratic leaders in Congress called on House Speaker John Boehner to resume talks on averting more than $600 billion in tax-and-spending changes starting in January, saying a solution must be bipartisan.

President Barack Obama plans to make a statement on the budget today at 5 p.m. Washington time, the White House said. Obama was meeting with Senate Majority Leader Harry Reid, according to an administration official who spoke on condition of anonymity.

“A comprehensive solution to the looming fiscal cliff will need to be a bipartisan solution,” Reid, a Nevada Democrat, said on the chamber’s floor today. “No comprehensive agreement can pass either chamber without both Democrats and Republican votes.”

Late yesterday, Boehner scrapped his plan to allow higher tax rates on annual income above $1 million because he lacked the votes in his Republican caucus to pass it. His action threw the already-stalled budget talks into turmoil as Boehner said Obama and Reid should come up with legislation to avoid the spending cuts and tax increases in 2013.

“Let’s go back to the negotiating table,” House Minority Leader Nancy Pelosi, a California Democrat, said at a news conference.

Reid said Republican divisions in the House are the reason no budget deal is getting done.

“It’s because the Republicans in the House are fighting among themselves,” Reid said.

Until Dec. 17, Obama and Boehner had been edging closer to a deal that would have included about $1 trillion each in tax increases and spending cuts.

After Christmas

Now that Boehner has pulled his plan, the House and Senate don’t plan to return until Dec. 27 to address the end-of-year budget issues. That will give them less than a week to reach agreementvto avert the tax increases and spending cuts set to take effect in January.

Representative Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, said Boehner “should bring a bipartisan bill to the floor and let the House work its will.”

“This House will say yes to a bipartisan bill,” said Van Hollen.

The Standard & Poor’s 500 Index retreated 0.9 percent to 1,430.15 at the close of trading in New York. The Dow Jones Industrial Average slid 120.9 points, or 0.9 percent, to 13,190.84. The benchmark 10-year Treasury note yield dropped four basis points, or 0.04 percentage point, to 1.75 percent at 2:59 p.m. New York time, according to Bloomberg Bond Trader data.

‘Perception’ on Taxes

Earlier today, Boehner said some members of the Republican caucus refused to back his tax measure because they didn’t want to be accused of raising taxes.

It was “not the outcome I wanted, but it was the will of the House,” said Boehner, 63, of Ohio. “They were dealing with the perception that someone might accuse them of raising taxes.”

Democrats and Republicans are fighting over whether George W. Bush-era tax cuts due to expire Dec. 31 should be extended for everyone, as Republicans want, or whether rates should rise for top earners, as Obama and other Democrats advocate.

Boehner said he pushed his alternative plan in the House to “jump start and try to kick into gear some action by the Senate to avert these tax increases going into effect Jan. 1.”

Boehner said he and Obama had traded “bottom line” offers on spending cuts and taxes. The speaker urged the Senate to take up legislation the House passed Aug. 1 that would extend the current rates on all taxpayers.

Proposal ‘Laughable’

In the Senate, Minority Leader Mitch McConnell, a Kentucky Republican, said Democrats should bring that bill up, allow amendments “from all sides,” and take the measure to a conference committee with the House.

Reid called the proposal “laughable.” McConnell “is struggling to find a way to blame Democrats,” Reid said. “To blame us for that travesty that took place over there” in the House, “that is pretty incredible.”

In his most recent tax proposal, Obama said he would be willing to extend tax cuts for households earning as much as $400,000 a year. Until Boehner made his $1 million threshold offer last week, Republicans had opposed tax rate increases for any income level.

If Congress doesn’t act, the policy changes starting in January include higher income tax rates at all income levels, the end of a 2 percentage point cut in the payroll tax, higher tax rates on capital gains, estates and dividends, and automatic spending cuts, about half in defense programs.

Next Year

“It looks like, to me, that obviously this is going to drag on into next year, which is going to hurt our economy,” Republican Senator Bob Corker of Tennessee said in an interview with Bloomberg Television’s Peter Cook for the program “Capitol Gains,” airing Dec. 23. “So this will just drag on and on.”

Still, Chad Stone, chief economist at the Center on Budget and Policy Priorities in Washington, said this month that instead of “fiscal cliff,” he prefers the term “fiscal slope” to describe how the effects would accumulate gradually over a matter of months during 2013. The components also can be reversed if a deal is reached early in 2013, he said.

In a message to Treasury Department employees, Deputy Secretary Neal Wolin said day-to-day operations wouldn’t change dramatically in January if the automatic cuts take effect. Furloughs may be possible later if the issue is unresolved for an extended period of time, he wrote.

Political Forces

The failure of Boehner’s proposal cast doubt on his ability to navigate the competing political and legislative forces bearing down on him. To get a tax-and-spending deal, Boehner must gain enough support from Republicans to keep control of his party while relying on Democrats for the votes needed to send any measure to Obama.

“It weakens the entire Republican Party, the Republican majority,” said Representative Steven LaTourette, a nine-term Ohio Republican who is retiring after this session. “If you’re not a governing majority, you’re not going to be a majority very long.”

That view was underscored by the results of an ABC/Washington Post poll released this morning. In it, 53 percent of Americans said the Republican Party needs less conservative policies that are more focused on middle-income and lower-income Americans, while 38 percent said the party needs better leaders to sell its policies. The telephone poll of 1,002 adults, conducted Dec. 13-16, has a margin of error of plus or minus 3.5 percentage points.

To contact the reporters on this story: Kathleen Hunter in Washington at; Roxana Tiron in Washington at

To contact the editor responsible for this story: Jodi Schneider at

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