Republican lawmakers are reportedly considering a so-called "doomsday plan" that would allow middle-class tax cuts to pass the House of Representatives while punting on other elements of the "fiscal cliff." President Barack Obama would get his way on higher taxes for household incomes above $250,000.
The doomsday plan would delay until 2013 any action on a grand bargain concerning the government's borrowing limits, tax reform, entitlement reform, unemployment benefits or the series of severe spending cuts set to take effect as part of the cliff. From ABC's Jonathan Karl:
Two senior Republican elected officials tell me this doomsday plan is becoming the most likely scenario. A top GOP House leadership aide confirms the plan is under consideration, but says Speaker [John] Boehner (R-Ohio) has made no decision on whether to pursue it.
If House Republicans follow through with this plan, they will delay any tough decisions on spending cuts or raising the debt ceiling, which will send the nation into 2013 with a large dose of uncertainty on a number of fronts.
But it would give them wiggle room on what they have long characterized as the politically unviable situation of extending the Bush tax cuts for the lower and middle-class Americans, while allowing them to increase for those making over $250,000. During the 2011 debt ceiling negotiations, Boehner ruled out any possibility that Republicans would allow taxes to go up on the nation's wealthiest.
But since the 2012 elections, the President Barack Obama has repeatedly stated that he will not, under any circumstances, extend the tax cuts for the wealthy, and some GOP lawmakers have shown signs of being willing to compromise over the issue. Last week, Rep. Tom Cole (R-Okla.) told Politico that the GOP should pass the Senate bill extending tax cuts for 98 percent of Americans, arguing that it would be the smartest political move.
"That's a victory, not a loss," Cole said on This Week with George Stephanopoulos. ”"And then we're still free to try and fight over higher rates, offering revenue, which the Speaker has put on the table."
Other representatives, including Rep. Mary Bono Mack (R-Calif.), Rep. Robert Dold (R-Ill.) and Rep. Mike Simpson (R-Idaho), have indicated that they would support Cole's proposition.
Under one version of the "doomsday plan," however, the GOP lawmakers wouldn't vote to extend the tax cuts themselves, but instead would register as "present," which would allow House Democrats to pass the measure on their own.
Even if Boehner rejects the doomsday plan and decides against bringing the tax extension to the House floor for a vote, House Minority Leader Nancy Pelosi (D-Calif.) has indicated that she will force the issue by bringing the Senate bill up for a vote as a "discharge petition."
"Last July, that legislation passed the United States Senate -- the exact same bill was introduced in the House at that time, and since then we have been asking the Republican leadership to bring the middle-income tax cut to the floor," Pelosi said at a Friday press conference. "The clock is ticking. The year is ending. It’s really important, with tax legislation, for it to happen now...[The measure] has tremendous support in the Republican Caucus -- I think we would get a 100 percent vote on it if it came to the floor.”
Under such a scheme, 26 Republicans would have to vote in favor of extending the tax cuts for the bill to pass -- a number far higher than the cadre of GOP legislators who have publicly taken this position.
Eliminating the tax breaks for the nation's top two percent could raise as much as $950 billion over the next decade, the Congressional Budget Office estimates. Republicans argue that the tax hikes would hinder U.S. job growth, but a report from the Congressional Research Service found that tax cuts for the wealthiest had no meaningful effect on economic growth.
On Monday, Boehner submitted a proposal that called for an additional $800 billion over the next decade through closing corporate tax loopholes and eliminating itemized deductions from the tax code, instead of raising the marginal tax rates on the top two percent of Americans. But a report released by the White House has already concluded that the federal government would only see an estimated $450 billion if it adopted the GOP strategy, provided that Republicans refused to eliminate their much-lauded charity exemption.