The White House rejected House Speaker John Boehner's "fiscal cliff" backup plan that would raise tax rates on incomes above $1 million if talks collapse.
The proposal, which the Ohio Republican dubbed "Plan B," would also leave in place military and domestic spending cuts that Republicans have said could have horrible consequences, especially to national defense.
Lawmakers from both parties gave the proposal little chance of passing. Some told The Wall Street Journal they saw the offer as a largely tactical maneuver on Boehner's part.
The White House immediately rejected "Plan B," with spokesman Jay Carney saying it could not pass the Senate and "therefore will not protect middle-class families" from large tax increases scheduled to start Jan. 1.
"The president has put a balanced, reasonable proposal on the table that achieves significant deficit reduction and reflects real compromise by meeting the Republicans halfway on revenue and more than halfway on spending from where each side started," Carney said in a statement.
Obama will not accept a deal "that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors," Carney said.
Obama Monday offered a plan that would raise tax rates on incomes over $400,000 -- a change from his earlier insistence on the increase affecting incomes over $250,000. Obama's offer would produce $1.2 trillion in tax increases and cut $930 billion in spending over 10 years.
Boehner called Obama's plan unbalanced and inadequate.
"What we've offered meets the definition of a balanced approach, but the president is not there yet," Boehner said Tuesday.
He said he was not giving up on talks with Obama. But with more than $500 billion in tax hikes and across-the-board spending cuts set to take effect in 13 days, he had to come up with a fallback plan to make sure most Americans don't see their taxes rise.
Republican leaders tentatively planned a House vote Thursday on Boehner's proposal. But that vote would follow a vote on a Senate-passed bill to extend the expiring George W. Bush-era tax cuts for incomes below $250,000, The New York Times said. That vote is expected to fail, as a show to Obama his initial $250,000 offer could not pass.
Some Republicans said they would be hard pressed to support any plan -- including Boehner's backup option -- that raises tax rates, even if only on income above $1 million.
House Armed Services Committee Chairman Howard McKeon, R-Calif., said he did not think he could support Boehner's bill because it would cut $500 billion from the military over 10 years.
Rep. John Fleming, R-La., told the Times: "Why go on record raising taxes on anybody if it won't cut spending and won't even become law? I haven't found a way of supporting that."
But other GOP lawmakers said they might grudgingly accept a tax increase on millionaires.
"I hate it. I hate it," Rep. Jason Chaffetz, R-Utah, told the Journal. "But I'm trying to be reasonable."
Despite the handwringing, Sen. Chuck Schumer, D-N.Y., said he expected Boehner and Obama would work out a deal that could pass both chambers.
"They seem to be so close that I'd be surprised if it fell apart," Schumer, a member of the Senate Democratic leadership team, told reporters on a conference call. "I think the likelihood is we will get an agreement."
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