Brendan Hoffman for The New York Times
Speaker John A. Boehner delivered a cutting response to President Obama on Wednesday.
WASHINGTON — Hopes for a broad deficit-reduction agreement faded on Wednesday as President Obama insisted he had offered Republicans “a fair deal” while Speaker John A. Boehner moved for a House vote as early as Thursday on a scaled-down plan to limit tax increases to yearly incomes of $1 million and up, despite Senate opposition and Mr. Obama’s veto threat.
The impasse was clear as Mr. Obama and Mr. Boehner separately spoke to the television cameras instead of each other, after a weekend of private negotiations amid grieving over the shootings in Newtown, Conn., had narrowed their differences enough to raise optimism about a far-reaching deal to stabilize the nation’s debt.
First Mr. Obama and then Mr. Boehner faulted the other side for the impasse, and ultimately the failure, if a year-end deal could not be reached to stop automatic tax increases and the indiscriminate spending cuts in military and domestic programs known as the “sequester.” The president, saying he had gone “at least halfway” toward Republicans’ demands, evoked Hurricane Sandy and the Newtown school massacre to prod lawmakers to compromise for the nation’s benefit.
“When you think about what we’ve gone through over the last couple months — a devastating hurricane, and now one of the worst tragedies in our memory — the country deserves us to be willing to compromise on behalf of the greater good,” he said during an appearance at the White House to discuss gun control.
“Frankly, up until a couple days ago if you looked at it, the Republicans in the House and Speaker Boehner were in a position to say, ‘We’ve gotten a fair deal,’ ” the president said.
About two hours later at the Capitol, Mr. Boehner delivered a surprisingly brief but sharp retort to Mr. Obama, after which he took no questions from reporters. He started by saying that on Thursday, the House would pass the fallback bill that he has called his Plan B, which would extend the Bush-era tax cuts, which would otherwise expire on Dec. 31, for all incomes up to $1 million — although later his leadership team was scrambling for votes.
“Then the president will have a decision to make,” he said. “He can call upon Senate Democrats to pass that bill, or he can be responsible for the largest tax increase in American history.”
The Boehner bill does hold tax benefits for those with a yearly income above $1 million. It would repeal two Clinton-era tax provisions that limit the personal exemptions and deductions that wealthy taxpayers can claim; extend the lower tax rates on inherited estates rather than allow them to revert to the pre-Bush administration level; and set a 20 percent tax rate for the dividends and capital gains of households earning at least $1 million a year.
The speaker’s package would raise about $300 billion in additional revenue over 10 years, compared with extending the Bush tax rates for all income, as Republicans long espoused. That is about $500 billion less than Mr. Boehner’s original offer for $800 billion. It is about $700 billion less than would be collected under Mr. Obama’s proposal to extend the Bush rates only for incomes below a $250,000 threshold for couples, and $200,000 for individuals. In the talks with Mr. Boehner, he moved that line to $400,000.
Mr. Boehner’s statement suggested confidence that Republican leaders would have the votes to pass his plan. But lawmakers who were counting votes for the leadership said the tally was short, and House leaders were adding provisions to the speaker’s bill to mollify dissidents.
Some Republicans, for example, objected that the plan would do nothing to prevent the automatic military cuts, about $50 billion, from taking effect in January. To satisfy Republican hawks, leaders will hold a separate vote on legislation, nearly identical to a bill passed earlier this year, that would cancel those cuts and instead shift them to domestic programs, a decision likely to amplify Democratic opposition.
Even if the House Republican majority passes the speaker’s measure, it probably faces doom in the Democratic-controlled Senate, making Mr. Obama’s threatened veto moot. Mr. Boehner’s office has countered that Congressional Democratic leaders in 2011 had supported a $1 million threshold for higher tax rates. Democrats said those proposals were largely intended to show that Republicans would not raise taxes even for millionaires.
While Mr. Boehner scrambled to unify his party, Mr. Obama faced unrest as well from liberals who said he had broken a campaign pledge to keep Social Security out of the deficit-reduction talks. Mr. Obama had given tentative support to Republicans’ demand that the government adopt a new inflation formula for calculating cost-of-living adjustments for federal benefits. The new formula would slightly reduce the growth in Social Security benefits from what it would be under the current inflation index.
Recalling his campaign, Mr. Obama countered, “What I said was that the ultimate package would involve a balance of spending cuts and tax increases. That’s exactly what I have put forward. What I have said is, in order to arrive at a compromise, I am prepared to do some very tough things, some things that some Democrats don’t want to see, and probably there are a few Republicans who don’t want to see them either.”
The president said he would continue to have discussions with Mr. Boehner and others. But on Wednesday, even the chief staff negotiators for the two leaders were not speaking.
In trying to line up votes, Republican leaders circulated word that the longtime antitax advocate Grover Norquist had blessed Mr. Boehner’s plan as compliant with his “Taxpayer Protection Pledge.” Because most Republican candidates sign the pledge not to approve any tax increase, Mr. Norquist effectively has long locked in their votes.
But Mr. Norquist seemed to bend his principles to issue the endorsement, perhaps to maintain his relevance in tax debates. Even senior Republicans lately have denounced Mr. Norquist as a deterrent to resolving the nation’s fiscal problems, given increasing bipartisan agreement that higher tax revenues are required to control debt growth.
Even so, the Club for Growth, a conservative group, said on Wednesday that it considered even Mr. Boehner’s scaled-back plan a tax increase bill and that it might work to defeat Republican lawmakers who voted for it.
