Analysis from ISI:
FAILURE OF PLAN B RAISES ODDS OF NO DEAL
The odds of going over the fiscal cliff rose last night then Speaker John Boehner pulled his Plan B from the House floor last night after it was clear he was going to lose the vote. The House adjourned and the Senate won’t take any action on the fiscal cliff until both return next week. Futures were off sharply right after the announcement last night that the vote was not going to happen.
Obviously, there is a great deal of uncertainty regarding what happens next. What we do know is that the already low odds of a grand bargain before year-end are lower after last night. So whether we go over the fiscal cliff or Congress passes some version of the Senate tax bill, the odds are now over 80% that the sequester will kick in, the payroll tax cut will expire, and the scheduled fiscal tightening for 2013 will exceed $400 billion.
Boehner has scheduled a press conference for 10:00am today, so we will probably get an idea of his intentions at that time. In a brief written statement last night Boehner said the leadership didn’t have the votes for Plan B and, “Now it is up to the president to work with Senator Reid on
legislation to avert the fiscal cliff.”
The reason Boehner moved to Plan B in the first place is that he became convinced that President Obama will not support the kind of entitlement changes that are needed to win support for a broader deal from a substantial number of Republican members. In Boehner’s view, despite all the media coverage about how close Obama and Boehner are to a deal, they were not on track to get a grand bargain because of their differences over spending and entitlements.
Even though roughly 85% of Boehner’s caucus was prepared to support him last night and a grand bargain would only need the support of about 40% of the GOP caucus to pass the House (presumably most Democrats would vote for it), the unmistakable impression everyone will draw from last night’s vote is that Boehner can’t rally his troops around his leadership. To the extent the White House has doubts about whether Boehner can deliver his end of a deal, those concerns will only be heightened and that obviously makes Obama less likely to make more concessions to get a grand bargain. Of course, the weakened negotiating leverage of Boehner, and Republicans generally, also gives Democrats less of a political incentive to make concessions to get a grand bargain.
That leaves the Senate tax bill as the leading alternative to going over the fiscal cliff entirely. The reason the GOP
leadership pushed for Plan B is they believed, correctly in our view, that it would have put them in a stronger position to reach a deal on a narrow tax bill where the tax increases started at around $500,000 or more. If Obama wants to get a compromise on a limited bill, he could get one easily by agreeing on a threshold of something less than $500,000. Such a bill would also likely include an AMT patch and perhaps items such as an extension of unemployment benefits and a doc fix. But it is less likely Democrats will agree to such a compromise after last night’s events.
If Obama won’t budge, then House Republicans are probably stuck with two options, both of which are highly undesirable for rank-and-file Republicans. Either pass nothing and go over the cliff or bring the Senate tax bill to the House floor and it allow it to pass mainly with Democratic votes. We don’t believe Boehner’s speakership is materially at risk, and bringing the Senate bill to the House floor would not jeopardize it. Many of the Republicans who opposed Plan B won’t object to bringing the Senate tax bill to the House floor. They oppose the bill, but they feel most strongly that they and other Republicans should not support any tax increases. The overwhelming majority of Republicans believe they will be blamed if the US goes over the fiscal cliff, so we think Republicans will end up agreeing to allow the Senate tax bill to pass the House.
Uh, what am I missing?
There is no other way for a Senate bill to pass the House unless a majority votes for it, and the Democrats are in the minority. Therefore, certain Republicans would have to be guaranteed to vote for it to go along with all the Democrats who would vote for it.
Oh great...here’s a massive Democrat vote in lockstep like the little Bolsheviks they are, but lookee here, there’s a few Republicans who vote with the Bolsheviks, thereby causing it to pass and be foisted on America. When we KNOW for a fact that it is wrong on so many levels.
I guess some people don’t have to PUT ON blinders, they just live with them on all the time...
"The political advantage of Plan B was that it could have shifted the focus to Senate Democrats and at least set them up to take some more of the blame if we go over the cliff."
...because the dems already had Plan B teed up (Of course with their Mediacrats in the wings) with low income families getting their taxes "raised" because their earned income credit was cut. Just one of several fronts they would of used to bludgeon your Statist boys (Amongst the Republican leadership's plans).
Boys and girls of the Boehner cheerleading squad, this is why you do not make idiotic deals like in 2011; eventually they will bite you in the behind. Supercomittees FTW, lol, that worked out well facing a Presidential election year where we could of had the dems by the balls. Fiscal sane individuals in the Republican Party finally got smart, grew a pair and told the Statist to f'off. Now everybody gets to feel the pain of what the majority voted for unless Boehner gets even more ignorant and bows to a dem plan (Who desire the debt ceiling to be raised, even when Bush raised it despite objecting, but that is another story altogether).