President Obama is pretty insistent that come Jan. 1, the wealthy pay higher marginal tax rates on any income above $250,000 a year, and he has a trump card: If nothing else happens, they will. Republicans are pretty insistent that the Bush-era tax rates stay in place for everybody, including the wealthy, but what to do about their weak hand? Fold, says Jonathan Karl at ABC News. "Republicans are seriously considering a Doomsday Plan if fiscal cliff talks collapse entirely": Give Obama his tax hike on the rich, at least for now, and "nothing more." Then, the president has no leverage, but Republicans do: The debt ceiling needs to be raised not long after the New Year.
Republicans are right — the "doomsday plan" may well be their "best way out of a bad situation," says Sahil Kapur at Talking Points Memo. Here's how it would work: GOP leaders in the House bring up a bill, already passed in the Senate, to keep tax rates low for everyone but the wealthy, then send it to Obama with House Democrats voting yes and Republicans voting "present" to "register their disapproval with letting the top marginal rates go up." House GOP aides deny the report, with one calling the idea "stupid," but it actually sounds pretty clever. The Bush tax cuts are Obama's "critical leverage" — "take that away and suddenly Republicans are in control," letting them call the shots when the president comes asking for more revenue, dealing with the looming steep budget cuts, and extending unemployment benefits, among other parts of his agenda.
The only way to explain this bizarre idea is that Republicans are "preoccupied with avoiding the atmosphere of surrender," says Jonathan Chait at New York. Sure, Obama wants more than just higher tax rates for the rich, but that's his main goal, and Republicans want some things, too, like avoiding $500 billion in defense cuts. Republicans can threaten to send the U.S. into default by not raising the debt ceiling, but Obama gets some extra time because he'll be starting the year "with a trillion in higher revenue in his pocket (through expiration of the Bush tax cuts on the rich)." And besides, "it's not clear that Obama is going to submit to another blackmailing" on the debt limit. So, how exactly does this "Doomsday Plan differ from just going along with what President Obama has been asking?" I guess it "sounds more badass than Capitulation Plan."
Is the plan perfect? No, says Ed Morrissey at Hot Air. But it allows Republicans to "extricate themselves politically from a collapse of the fiscal-cliff talks." If Democrats thwart the plan — House Democrats vote no, or the Senate refuses to pass the bill with some amendments to fix the alternative minimum tax, or Obama declines to sign it — then they become the ones "holding the middle class hostage."
The true doomsday option, other than flying off the fiscal cliff like Thelma and Louise, would be to pass Obama's latest offer through a House vote where Republicans vote "present." The negative impact those policies have on the economy would be completely owned by Obama and Democrats. That would create a lot of pain and economic damage that could be mitigated by good-faith negotiation between the parties, but if Democrats refuse to engage in such, then the political options are all that remain for the GOP.