Republicans are drawing up a fall-back strategy to avoid the fiscal cliff if talks with Democrats fall apart. Both sides in past days have made concessions toward reaching a solution, even as some observers' outlook showed little optimism.
House Speak John Boehner this morning said he will develop a Plan B, which will include tax hikes on million-dollar earners but will not cut entitlement programs like Medicare and Social Security, according to The Wall Street Journal. Republicans would shift the $55 billion in defense cuts to other parts of the federal budget.
Market enthusiasm was not restrained by Boehner's latest comments. The Dow Jones industrial average climbed 0.6% to 13,309.94, and the S&P 500 gained 0.7% to 1,440.57. The Nasdaq composite added 1% to 3,041.71.
Fiscal cliff talks seem in full swing. A new White House deal calls for $1.2 trillion in new revenue over a decade and raising taxes on Americans earning more than $400,000. It would keep the core of the Bush Tax Cuts intact, while raising some taxes on the highest earners. Importantly, Republicans and Democrats still differ about defining wealthy Americans, but are moving closer. Originally, Obama had wanted taxes hikes for Americans making more than $250,000; then, Boehner relented on his stance of no new tax increases for anyone, agreeing to hikes on millionaires.
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