Boehner derails tax increase, Obama’s 2012 plan

Neil Munro White House Correspondent
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President Barack Obama’s 2012 re-election campaign ran off the rails today when GOP leaders refused his last-minute demand for $400 billion in tax increases, instead announcing their intention to negotiate a plan with Senate Democrats.

This fallback option may only be a short-term plan to avoid a default by raising the limit on the nation’s credit card; it could be coupled with modest budget cuts of a few hundred billion dollars.

But it is not likely to be be the “big deal” that Obama had sought via closed-door negotiations in the final few weeks before a default.

Obama’s favored approach, had it been approved, would have boosted his claims to swing-voters that he is a consensus builder in Washington, and that he is a political moderate willing to approve modest spending cuts.

Obama’s deal would also have required a tax increase — something sure to split the GOP caucus and rally the Democratic Party around the president at a time leading up to the 2012 election.

But the dramatic and last-minute failure of the talks may gravely marginalize Obama’s claims of being a post-partisan fiscal moderate. If the Republicans craft a fallback deal with the Senate, it would sideline the president and embolden Republican legislators and Tea Party supporters.

Senate Democrats are reluctant to work with Boehner, and may agree only to a stripped-down deal that does not require them to approve painful budget cuts prior to the 2012 election. The Democrats have only a four-vote majority in the Senate and are loath to risk one of their members losing re-election or their current majority status.

Boehner refused to agree to tax increases that Obama demanded at the last minute. The increases amounted to $400 billion, Boehner said. (Obama: I’ve been left at the altar)

“There was an agreement [for] $800 billion on [extra] revenue … [but] the President walked away from this agreement and demanded more money, and the only way to get that extra revenue was to raise taxes,” he said.

In a background press briefing, White House officials said the $800 billion would have come from the expiration of the upper-income tax cuts established during George W. Bush’s presidency. But the extra $400 billion would have come from new taxes that GOP legislators refused to accept, the officials said.

White House officials also said they had agreed to save money by raising the eligibility age for Medicare recipients from age 65 to 67. That financial impact of that move, however, was modest because the age was to be raised over a long period, and because the deal did not include any rollback of the expensive Obamacare plan to regulate the health sector.

White House officials said they hope to restart negotiations and complete a big deal. But Boehner said he hoped to negotiate a debt-ceiling deal with Senate Democrats instead. “We can work together to forge an agreement … and I’m hopeful the President can work with us on that agreement,” Boehner said.

Boehner explained his decision to work with the Senate by saying the president’s negotiating position was unclear. (Krauthammer: This is Obama at his most sanctimonious, demagogic)

“Never once did the President ever come to the table with a plan,” he said. “We were always pushing … [but] dealing with them is like dealing with Jell-O,” he said.

“I will not get into the partisan sniping that I heard earlier [from Obama], but I can tell you there was every effort to avoid the real [budget] cuts we need to make to preserve the fiscal authority of the country … [and to preserve] and the entitlement programs,” he said

“I’m confident the Congress can act next week” to prevent a default, he said.

Still, Boehner said he would accept Obama’s invitation to attend a meeting in the White House at 11:00 a.m Saturday.