After President Obama was re-elected on Nov. 6, Americans faced a reality on Nov. 7: Taxes are going up. The only question facing conservatives now is how much of that tax hike they can prevent while also preserving as much of the hard-fought spending cuts they won in 2011.
Here are the facts: If nothing happens by Jan. 1, taxes will automatically rise by about $4.6 trillion over 10 years. Every working American would be hit. However, thanks to the August 2011 debt-limit deal, spending is also set to be cut by $1.2 trillion. Conservatives often forget about this little piece of leverage.
Obama's top priority is to raise taxes as high as he possibly can. A $1.3 trillion tax hike was his latest offer. But undoing the $1.2 trillion spending cut in the debt-limit deal is also important to him. His latest offer not only rescinds the scheduled spending cut, but it also calls for $80 billion in new stimulus spending. Obama did also offer to cut Social Security by $120 billion over 10 years and make $800 billion more in other unspecified spending cuts, but he has flat out refused to entertain any serious entitlement reform proposals.
Boehner's last offer to Obama wasn't much better. It only raised taxes by $1 trillion and undid the $1.2 trillion spending cut from the debt-limit deal. Boehner did call for a new $1 trillion spending cut to replace the sequester, but no meaningful structural entitlement reforms were included.
Realizing that negotiations with Obama were going nowhere, Boehner introduced a Plan B to his conference yesterday that is probably the best deal conservatives can hope for. Plan B would allow tax rates to rise on incomes over $1 million a year, fix the Alternative Minimum Tax that is scheduled to hit thousands of middle-class families and reform the estate tax to protect small businesses. All told, Boehner's Plan B would prevent tax hikes from hitting 99.81 percent of all Americans.
No, Plan B would not address the real drivers of our national debt; the big four entitlement programs, Social Security, Medicare, Medicaid and Obamacare. But as long as Obama is president, no meaningful reform of these programs is possible anyway. Republicans hope in vain if they think they can negotiate their way to a deal that includes such reform.
What Plan B does do is preserve the $1.2 trillion in spending cuts that conservatives won during the debt-limit deal. The $1.2 trillion at least includes $123 billion in Medicare cuts. That is more entitlement "reform" than Obama is currently offering.
Many Republicans are no doubt worried about the heat they will take back home from conservatives for relenting on tax increases for millionaires. But Republicans looking to minimize Obama's tax hike damage received a huge boost yesterday when the most powerful anti-tax group in the nation, Grover Norquist's Americans for Tax Reform, said it would not consider a vote for Plan B to be a violation of the Taxpayer Protection Pledge.
"This legislation -- popularly known as 'Plan B' -- permanently prevents a tax increase on families making less than $1 million per year," ATR explained. "Republicans supporting this bill are this week affirming to their constituents in writing that this bill -- the sole purpose of which is to prevent tax increases -- is consistent with the pledge they made to them."
Senate Democrats may well end up voting Plan B down in the Senate, despite the fact that they voted for the exact same tax hike in 2011. Let them. That way the American people will know which party is truly committed to preventing middle-class tax hikes.