The Magic Number for Obama and Boehner: $550,000
I try not to write anything with too many numbers in it, but I am making an exception for Cliffmas. Here is my prediction: The final cutoff for increased taxes will be $550,000, give or take $25,000.
I derive this number not necessarily from reading op-eds, proposals and white papers offered by the likes of Warren Buffett, the Committee for a Responsible Federal Budget and the Tax Policy Center. More to the point, I have been listening to the musings of legislators and reporters, sober and not so sober, at holiday cocktail parties.
President Barack Obama has offered to raise taxes only on those earning more than $400,000, up from his initial offer of $250,000. House Speaker John Boehner needs today's vote to happen to so he can get to a number below his caucus's drop-dead number of $1 million. For that it helps to have a daylong stalemate and a vote -- it keeps his members occupied while negotiations (which they are shut out of) proceed quietly. They get to flaunt their majority by passing a bill, even one sure to be vetoed. Even Democrats play into the script by crying what a waste of time the vote is.
A waste of time? That's just another day at the office for Boehner. A speaker has to have what a speaker has to have, if he's to be re-elected by his fractious caucus in the new Congress.
Once Boehner has given them their roll call and his members have something with their name on it to take home to their districts, the House will be a sad place, reminded again how little power it actually has in this skirmish with Obama. Members will also be reminded by another day of poll numbers that they will be blamed more than Democrats if we go over the fiscal cliff.
Now if I were king, I would stick with $250,000 as the cutoff above which taxpayers pay more. The poor have suffered enough in this recession, and the rich have come out of it sooner and richer than anyone else. Obama's concession is already a reminder of how much he doesn't like to go even near the edge of any cliff. It may be good statesmanship, but it's bad drama. He still has the stronger hand: Let the Bush tax cuts expire, come back with a middle-class tax cut and dare Republicans to vote against it.
So today's Plan B vote is a blip on the way to Plan C. After today, Boehner will be freer to negotiate with Obama, but he will still give more than he gets. If you average the Republicans' number and Obama's -- $1 million and $400,000 -- you get $700,000. So with a final number of $550,000, Boehner comes out $150,000 behind.
The closer we get to nonrefundable tickets to warm climes for the holidays, the smaller that $150,000 is going to look. That's how we get to $550,000.
Read more breaking commentary from Bloomberg View at the Ticker.