Boehner's Plan B: A Disaster For The Economy
Yesterday House Speaker John Boehner’s (R-OH) released his controversial and widely criticized "Pan B" - the Republican counteroffer to advert the so-called "fiscal cliff." Boehner's Plan B would extend the Bush-era tax cuts for those making under $1 million dollars and lead to massive job losses, a middle-class tax hike, and almost no deficit reduction.
The following is a rundown on the latest regarding Plan B.
Center for American Progress calls Plan B a disaster for the economy.
Plan B does absolutely nothing to address the budget sequester, the expiring payroll tax cut, upcoming automatic cuts to Medicare doctors, or lapsing unemployment insurance. According to the Congressional Budget Office, failing to deal with these issues will result in up to 2.7 million fewer jobs next year. Plan B would, in short, be a disaster for the economy.
Plan B also fails to extend several expiring tax credits that benefit low- and moderate-income families. As a result, more than 20 million families would see a substantial tax increase next year, and that’s before taking into account the expiration of the payroll tax cut, which affects everyone with a job. By contrast only about 300,000 millionaire households would pay more in taxes under Plan B. In fact, the total tax increase on middle-class families is about the same as it is for millionaires. If you include the effect of the expiring payroll tax cut, then the Plan B middle-class tax hike is actually substantially larger than the plan’s millionaire tax hike.
But even after hiking the taxes on millions of middle-class families, Speaker Boehner’s Plan B accomplishes virtually nothing for long-term deficit reduction. Relative to today’s policies, Plan B would reduce the deficit by about $500 billion over the next 10 years. That’s not even one-fifth of what President Obama’s offer would do. Needless to say, it would not come close to arresting the projected rise in the national debt, measured as a share of GDP.
Think Progress exposes several crucial details about Plan B that Boehner’s website simply ignores.
|House GOP Claim||Reality|
|Does not raise taxes. It is a net tax cut that prevents a $4.6 trillion tax hike on January 1||In fact, by allowing several key tax credits to expire –including the expanded Child Tax Credit and a credit that helps with higher education tuition — Plan B would raise taxes on 20 million families. Also, allowing the current payroll tax cut to expire will affect every working American. As the Tax Policy Center noted, “Most low income and middle income families with children will see their taxes rise.”|
|Permanently extends income tax rate cuts for Americans making less than $1 million, which protects 99.81 percent of all taxpayers||This plan would raise just 15 percent of the revenue of Obama’s campaign proposal to allow the Bush tax cuts to expire on income in excess of $250,000. As Citizens for Tax Justice noted, “millionaires get 50 percent of the additional tax breaks from moving the threshold to $1 million.”|
|Permanently extends the current estate and gift tax ($5 million at 35 percent and indexed for inflation)||Keeping the estate tax at this level means that a miniscule 0.2 percent of estates will face the tax, costing the government billions in revenue every year. All of the benefit goes to the very wealthiest Americans.|
|Permanently extends parity for capital gains and dividend taxes, preventing dividend taxes from being taxed at the highest rates||Similar to the voter-rejected Romney tax plan, this would be another handout to the wealthy. President Obama has proposed allowing the Bush tax cut on dividends to expire for high-income earners.|
|Does not include anything on the debt limit or other non-tax policy items||This means that federal unemployment benefits will expire for two million workers, and gives the Republicans the opportunity to hold the debt limit hostage when it needs to be raised in a few months.|
The Atlantic has reported that President Obama would veto Plan B if necessary.
Not only does he reject it, but President Obama would veto House Speaker John Boehner's "Plan B" for the fiscal cliff — a bill that would extend the Bush tax cuts for income under $1 million separately from other deficit-cutting measures that are being negotiated in the fiscal cliff. The White House said in a statement Wednesday morning that Plan B "places too big of a burden on the middle class, seniors, students and the most vulnerable Americans while asking too little of the wealthiest Americans."
Salon reports that Plan B doesn't appear to have support among House Republicans.
First came Boehner’s declaration that Obama’s terms were unacceptable and that he would begin pursuing “Plan B” – a House vote simply on extending the Bush rates for all income under $1 million. This wouldn’t help resolve the standoff, since Senate Democrats say they’d never act on Boehner’s plan. There are also doubts about how much support Plan B has among House Republicans, more than two dozen of whom apparently spoke out against it at a GOP conference sessions yesterday.
Fundamentally this plan fails to address our long term fiscal challenges by only achieving minimal deficit reduction. The American people have been clear that they will not accept an economic approach that places too big of a burden on the middle class, seniors, students and the most vulnerable Americans while asking too little of the wealthiest Americans. This irresponsible plan not only sticks the middle class with the bill, but it also fails to ask the wealthy to pay their fair share.