A Primer on Boehner’s “Plan B” and GOP spending cuts

Posted on December 20, 2012

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John Boehner’s desperate attempt to hold onto his House Speaker position by pandering to his Tea Party and Grover Norquist-loving members of the GOP House caucus, has led him to terminate discussions with the President and propose his alternative plan, dubbed “Plan B”.  Speaker Boehner intends on offering up a vote on the Plan in the next day despite the Senate Democrats stating that they won’t vote on the bill because they have already passed a measure that raises taxes on those making $250K/yr vs. Plan B’s $1M/yr threshold. Additionally, the President has promised to veto Plan B. Essentially, Boehner is just posturing with a proposal that would be dead on arrival in the Senate, instead of engaging the President in meaningful negotiations.

Here is a breakdown of the GOP’s Plan B and the associated spending cuts (Courtesy of Think Progress)

Plan B

Speaker of the House John Boehner (R-OH) on Tuesday released the Republican “Plan B” for averting the so-called “fiscal cliff”: a bill to allow the Bush tax cuts on income in excess of $1 million to expire. The White House has already said that President Obama would veto the bill if it ever reaches his desk, but House Republicans are forging ahead with a vote, claiming that their bill is a “net tax cut.”

Boehner’s website lays out the plan here, but leaves out some crucial details, which ThinkProgress provides below:

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.

 

Spending Cuts

House Republicans today, in addition to voting on Speaker John Boehner’s (R-OH) so-called “Plan B” — which extends the Bush tax cuts on income up to $1 million — will also vote on a bill to replace the spending cuts scheduled for the end of the year.

As The Hill reported, the bill closely mirrors a measure passed by House Republicans in May known as the “The Sequester Replacement Reconciliation Act of 2012.” (Here is the underlying legislation, which will include these minor tweaks.) That bill voids both the mi

litary spending cuts and domestic spending cuts set to take place in 2013 and replaces them with a host of cuts to domestic spending, including:

Cuts to food stamps that could knock millions of low-income Americans out of the program;

Cuts to Meals on Wheels, a program that delivers meals to seniors or other individuals who are unable to prepare their own food;

Cuts funding to health exchanges that will be created under Obamacare and funding for Medicaid included in the same law;

Cuts to the Dodd-Frank financial reform law that will yield no cost savings, but will make bailouts of big banks more likely;

Denying the Child Tax Credit to the parents of American children, if the parents are undocumented immigrants.

The White House threatened to veto this set of spending cuts back in May, calling them “a particular burden on the middle-class and the most vulnerable among us.”

The inclusion of these cuts is ostensibly to placate House Republicans upset at Boehner for advancing “Plan B,” which does nothing on the spending side of the federal government’s ledger. Plan B already includes provisions that will cut taxes for some of the wealthiest Americans while raising them for low- and middle-income families.

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