With time running out for a "fiscal cliff" deal by Christmas, House Speaker John Boehner today unveiled a "plan B" to avert tax hikes on thousands of Americans, hoping to bring certainty for taxpayers in the new year and new pressure on the White House to curb government spending.
The plan, which Boehner intends to put to a vote in the House later this week, would extend current income tax rates for everyone making less than $1 million a year but leave unresolved until 2013 major issues such as the debt limit, unemployment benefits and pending automatic cuts to defense programs.
"We all know that every income tax filer in America is going to pay higher rates come January the 1st unless Congress acts," Boehner told reporters."It's important that we protect as many American taxpayers as we can."
The backup plan received a chilly response from Democrats and some Republicans who said it could not pass.
"Speaker Boehner should focus his energy on forging a large-scale deficit reduction agreement," said Senate Majority Leader Harry Reid. "It would be a shame if Republicans abandoned productive negotiations due to pressure from the Tea Party, as they have time and again."
Several congressional Republicans suggested they would not vote for any plan that allows tax rates to rise. Boehner's "plan B" would let the top marginal tax bracket increase from 35 to 39.6 percent next year.
"I don't want to raise taxes on anybody and I didn't come here to raise taxes or increase spending," Rep. Marsha Blackburn of Tennessee said after meeting with Boehner.
The Ohio Republican's maneuver also riled negotiations on a broader deficit-reduction deal as details of compromise between Republicans and President Obama have begun to emerge.
In a new offer to Boehner on Monday night, Obama offered to raise his tax-hike threshold to incomes above $400,000 and trim his overall tax revenue target to $1.2 trillion over 10 years. He would allow more limits on entitlement spending, including slower annual cost-of-living increases for Social Security beneficiaries.
Obama also dropped his request for full, permanent control over the nation's debt limit, instead seeking only a two-year increase to get the administration past the midterm election in 2014, the White House said.
The move follows concessions by Boehner over the weekend, when he for the first time agreed to higher tax rates on the wealthiest Americans making more than $1 million a year. He has also signaled a willingness to put off desired changes to Medicare, such as raising the eligibility age, until next year.
A spokesman for Boehner called the mutual concessions a "step in the right direction," though Republicans still sought additional spending cuts. The White House made a point of noting that its latest proposal is not "our final offer," signaling more room for compromise.
"The parameters of a deal are clear, and the president is willing to continue to work with Republicans to reach a bipartisan solution that averts the fiscal cliff," said White House spokesman Jay Carney in a statement.
Unless they can reach an agreement by Dec. 31, Americans will face a cascade of economically toxic tax hikes and deep automatic spending cuts starting early next year. The predicament results from previous failures by Congress and the White House to take steps to curb spending and debt.
But even as both sides inched closer together, aides said significant differences remain on the path to a broad deficit-reduction deal.