'Plan B' illustrates new political dynamic

With Speaker John Boehner’s (R-Ohio) latest proposal to increase tax rates on millionaires and partially avert the “fiscal cliff,” a post-election shift in bargaining positions has come full circle: Republicans are now the ones rhetorically pleading to protect all but the wealthiest taxpayers.

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In the hours after Boehner pitched his “Plan B” to the House Republican Conference, his aides have sought to corner Democrats by pointing out that, as recently as May, Minority Leader Nancy Pelosi (D-Calif.) was calling on the GOP majority to hold a vote on a bill preventing a tax increase on annual income up to $1 million.

“For years, Washington Democrats – led by Sen. [Charles] Schumer [D-N.Y.] and Rep. Nancy Pelosi – have been calling for a bill to stop the tax hikes except on millionaires,” Boehner spokesman Michael Steel said. “They even voted in favor of it. To oppose it now would make them entirely responsible for the tax hikes that tens of millions of Americans face in less than two weeks. They know that, and the president knows that.”

Schumer, the No. 3 Democrat in the Senate, has repeatedly in recent years tried to break the political logjam on taxes by proposing to change the threshold for top-rate increases from $250,000 to $1 million. In 2010, Republicans noted, 53 Democratic senators voted for a bill to do that.

Beyond the rhetorical volleys, nothing more starkly illustrated the new political dynamic than Boehner’s latest offer. Coming off a devastating congressional defeat in the midterm elections in 2010, Democrats floated the change before ultimately agreeing to extend Bush-era tax rates across the board.

With Obama’s reelection two years later, Democrats are intent on holding the line.

“Republicans should've taken Senator Schumer's offer two years ago when they had the chance,” Schumer spokesman Brian Fallon said. “We've had an election on the president's tax plan, the president won, and Republicans can't turn the clock back.”

“It's not surprising Republicans are having buyer's remorse, but we need higher revenues now. The more revenue we raise upfront through a tax rate increase on the wealthy, the less likely the middle class will get hit on the deduction side," Fallon said.

Pelosi dismissed the Boehner proposal as well, saying in an interview on MSNBC that her letter to the Speaker in May was designed simply “to smoke out the Republicans.”

Her comments came after the No. 2 House Democrat, Minority Whip Steny Hoyer (D-Md.), awkwardly referred to Pelosi’s earlier move as “a political ploy.”

Since the election, Pelosi has returned to arguing for the $250,000 threshold.

In a statement, Pelosi called the GOP move both “a victory” for Obama and a “cynical ploy.”

“Earlier this year, I put forward a plan to smoke out the Republicans’ true position: a proposal to raise taxes on those making over $1 million per year in context of a big, bold, and balanced plan,” she said. “Republicans said ‘no’ six months ago; the president took his case to the American people to use $250,000 as a threshold for higher tax rates, and the public supported him.”

“With the fiscal cliff just two weeks away,” Pelosi continued, “Republicans’ so-called ‘Plan B’ is nothing more than a cynical ploy that is harmful to the middle class and the economy. It is not big enough or balanced enough to comprise a sufficient down payment to reduce the deficit and promote growth, while instilling confidence in consumers and the markets, lifting the sequester, and preventing another Republican-led downgrade of our nation’s credit rating.”

She said House Democrats were “united in opposing this gimmick.”

In a concession to Republicans on Monday, Obama offered to move the top rate to $400,000 a year – making the debate about a $250,000 threshold essentially a moot point.