Boehner’s backup tax plan shakes up ‘fiscal cliff’ negotiations

House Speaker John A. Boehner (R-Ohio) veered off the bipartisan course he had been charting toward a broad tax-and-entitlement deal with President Obama and instead Tuesday pushed a GOP package to extend tax cuts for income up to $1 million.

The move shook the Capitol after several days of significant progress between Obama and Boehner, who had moved closer to a pact raising taxes on the wealthy and curbing government spending, including on Social Security.

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Boehner and his aides stressed that he was not giving up on talks with Obama over a broader deal. But the speaker said that the White House had failed to make an acceptable offer and that, as a result, he needed to move ahead with a more limited “Plan B.” He said that time is running out before the end of the year, when more than $500 billion in tax hikes and spending cuts are set to take effect, and that he had to proceed with his fallback plan to ensure that most Americans do not see their taxes rise.

It was unclear Tuesday whether Boehner was in large part using the plan to extract more concessions from Obama and perhaps to secure more support from House Republicans later for a big deal with the White House.

Obama’s deputies rejected Boehner’s unilateral move as unacceptable but said they continued to have hope that a broader, bipartisan agreement could be reached.

The speaker laid out his fallback plan just as rank-and-file lawmakers in the House and the Senate were beginning to digest the latest proposals to emerge from the negotiations between Obama and Boehner. The president dispatched his top congressional negotiator, Rob Nabors, on Tuesday to quell uprisings among House and Senate liberals upset that the White House had made a key concession by agreeing to apply a less generous calculation of inflation for federal programs, including Social Security.

Conservatives, meanwhile, voiced skepticism about Boehner’s Plan B, saying it would violate their principle of opposing any tax increases while failing to spare the Pentagon from deep budget cuts starting next year.

At an evening meeting with House Republicans, Boehner made an urgent pitch for his new plan, saying it would lock in tax cuts permanently for more than 99 percent of taxpayers, even if millionaires’ tax rates increased. He said his approach would buy time so he could reach a final deal with Obama early next year to address the remaining portions of the “fiscal cliff,” which includes automatic cuts in government spending and tax hikes.

“I believe it’s important that we protect as many American taxpayers as we can. And our Plan B would protect American taxpayers who make a million dollars or less and have all of their current rates extended,” Boehner told reporters after one of two closed-door meetings of the GOP caucus Tuesday. Republican leaders were planning a Thursday vote in the House.

Plan B legislation was still being drafted Tuesday, but leadership aides were arguing to rank-and-file Republicans that they should view the proposal as akin to voting for a tax cut. Rather than allowing rates to spike for almost everyone, this proposal keeps more than $4 trillion over the next decade in taxpayers’ pockets — increasing record budget deficits by the same amount. In addition to permanently extending the George W. Bush-era tax cuts for households making less than $1 million, it would permanently rein in the alternative minimum tax and maintain the tax on inherited estates worth more than $5 million at 35 percent.