Plan B's Failure: Not a Disaster for the Fiscal Cliff, but a Disaster for the GOP

Yesterday, the party of the 1 percent became the party of the 0.3 percent.

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Reuters

Six weeks after Republicans failed to get out the vote and learned they can't win as a party for the rich, exclusively, Republican leadership couldn't find the votes to raise taxes on millionaires. Who said elections have consequences?

There was never a remote chance that John Boehner's Plan B would become law. It was always a symbolic vote to let Republicans say they're willing to spare 99.7 percent of the country from a tax increase in 2013. Today, the GOP was hoping to stand before a pool of reporters and tell Democrats: It's on you, now.

Instead, opening night for this little bit of theater was a smashing disaster and the symbolism worked entirely in the opposite direction. It was Republicans who sent the message that they'd rather let taxes go up on everybody than raise taxes for the top 0.3 percent of households. It was Republicans who made the symbolic display that they care more about immediate spending cuts in a weak economy than building an off-ramp before the fiscal cliff. And it was Republicans who appeared to have utterly no idea how to cope with the new inescapable political reality that taxes are going up, no matter what.

Plan B was designed to fail, right from the start. In addition to raising taxes on millionaires (Kryptonite to Republicans) it also cut tax benefits for lower-income families (Kryptonite to Democrats). In fact, taxes would go up by hundreds of dollars for the typical family making less than $50,000, according to the Tax Policy Center. As you can see in the chart below, it's really only families making between $200,000 and $1,000,000 dollars (the 97th to 99.7th percentile of taxpayers) who would get a break under Plan B.*

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Now there are two key dates going forward: January 1 and January 3. On January 1, we're off the cliff. On January 3, the House of Representatives holds the next election for Speaker. In an atmosphere of GOP dissent, Boehner might need Democrats for both votes. He doesn't have enough GOP support to pass a bill that raises taxes, and he might not have enough GOP support to control his own caucus on January 4. The first political reality is that taxes are going up, no matter what. The second political reality is that Boehner will need Democratic votes to pass legislation.

"We've got to make sure that we are not the party of big business, big banks, big Wall Street bailouts, big corporate loopholes, big anything," Louisiana Governor Bobby Jindal said in November. "We cannot be, we must not be, the party that simply protects the rich so they get to keep their toys."

Jindal's comments were both utterly right and devastatingly prescient. The country would benefit from a party with a conservative, market-driven approach to economic inequality and social mobility. One day, it just might get one. But yesterday, in an attempt to show off how reasonable Republicans could be, Boehner accidentally revealed the stark unreasonableness of a party that's defining itself by a smaller number every month. Yesterday, the party of the 1 percent became the party of the 0.3 percent.

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*I will neither rule out, neither will I endorse, the remote possibility that some Republicans resisted voting for Plan B for this reason.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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