By Elizabeth K. Nevitt and Lori Pickford
President Obama is bringing congressional leaders to the White House today (12/28) in a last-ditch effort to find agreement to avoid across-the-board tax increases and spending cuts set to begin at year’s end. However, there appear to be several signs that indicate that neither side is willing do what is needed to reach a grand compromise. Senate Minority Leader Mitch McConnell (R-KY) said he received a rare call from President Obama asking top leaders from both parties to sit down at the White House on Friday. As Senate Majority Leader Harry Reid reconvened the Senate for a rare holiday week session, he bluntly predicted "it looks like the country is headed over the fiscal cliff without a bipartisan deal."
Speaker John Boehner, on the other hand, announced he would call the House into session on Sunday, Dec. 30; however, most insiders agree there is not enough time to procedurally pass a bill through both chambers before the end of the year.
Prior to the Christmas break, the House scrapped efforts to vote on Boehner’s "Plan B," developed in case an agreement could not be made. "Plan B" would have made permanent the Bush tax cuts for those with incomes below $1 million annually – a far higher threshold than the $250,000 per household Obama first proposed and the $400,000 level he recently offered to Boehner. The bill did not address unemployment insurance, the debt ceiling or the Production Tax Credit and other business tax extenders.
Grover Norquist’s Americans for Tax Reform, a group that holds elected officials accountable for pledges made to not raise taxes, said that a vote for Plan B would not be a violation of its pledge. Nevertheless, some Republican House members still refused to support the bill because it would have resulted in higher taxes for the very wealthy.
On pulling the bill, Boehner said, "Now it is up to the President to work with Reid on legislation to avert the fiscal cliff." The House has previously passed legislation to avert the fiscal cliff, but it was not the product of bipartisan negotiation.
Of special relevance to public power, in his recent counter-offer in the negotiations, President Obama reportedly proposed the immediate enactment of a 28% cap on the tax value of deductions and exclusions, including the exclusion for municipal bond interest. According to one description, the cap would take effect on Jan. 1, 2014, serving both as a fail-safe if Congress fails to enact tax reform legislation in 2013 and as an incentive to affected interest groups (who will work to enact tax reform so as to mitigate the damage done by the pending 28% cap). APPA has encouraged its municipal members to contact their Congressional delegations in opposition to this proposal.
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