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In ‘cliff’ negotiations, progress interrupted

House speaker’s ‘Plan B’ distracts from reasonable deal

A reminder today of how negotiations often work:

First, each side makes proposals it knows the other side would never accept while feigning outrage at the other side’s implausible proposal. Next, the two sides embark on a series of counteroffers that are slightly more reasonable – with the level of reasonableness directly linked to the amount of leverage each side believes it has.

Then comes the hard part: closing a deal that inevitably contains pieces that make each side unhappy, but gets done with the understanding that compromise is an unpleasant but necessary thing that adults do.

Such has been the slow and contentious path of “fiscal cliff” talks between President Obama and House Speaker John Boehner. Until this week, that is, when Boehner unnecessarily yanked at the steering wheel by proposing a ludicrous and already doomed “Plan B” to Congress.

Plan B is actually two proposals, which could be introduced today. One would give House Republicans a chance to shout “no” at President Obama’s initial preference to raise taxes on income above $250,000. The other would let taxes go up only on households earning more than $1 million, a threshold palatable to some Republicans. Plan B also would fix some pending fiscal cliff problems, including the alternative minimum tax, but would allow harsh “sequestration” cuts to kick in Jan. 1 and continue until new negotiations begin over the expiration of the debt ceiling. Republicans feel they’ll have more leverage then.

Plan B hasn’t a chance of passing the Senate – and might not even make it through the Republican-controlled House. So what’s Boehner thinking? He could be trying to persuade Obama to compromise more on the income threshold for upcoming tax hikes. He could be trying to show the public and his party that he isn’t willingly caving to a president who holds a significant advantage in public opinion.

Obama isn’t playing along. He rebuffed “Plan B” Wednesday, telling reporters that Boehner and Republicans “keep finding ways to say no rather than to say yes” and that they should “take the deal.”

That’s a message his own party should heed, too. The “deal” Obama is offering calls for tax rate hikes the GOP will have difficulty swallowing, but at a compromise income threshold of $400,000 that has some Democrats balking. In addition to that $1.2 trillion in revenue, Obama also is proposing the application of a new measure of inflation that would slow the growth of Social Security cost-of-living increases. Democrats aren’t happy at all about that concession, but the new gauge would save $225 billion over a decade.

The two sides also are reportedly close on letting a Social Security payroll tax holiday expire, and Obama has split the difference on the dollar amount of spending cuts he and Republicans want – the latest offer from the president is $930 billion in mostly yet-to-be-determined cuts. So the fundamentals, at least, are in place for a deal that begins to address the debt and lays the groundwork for meaningful discussion on entitlement and tax reform.

That discussion, however, can happen only if both sides accept that reform is a shared endeavor. We’re optimistic – OK, maybe just hopeful – that the House Speaker’s stunt was a momentary diversion from negotiations that were beginning to get us there.

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