The people who have been worrying about the Fiscal Cliff the loudest are feeling vindicated today.
Dow futures are off 161 following John Boehner's failure to get a GOP "Plan B" through the house.
The thinking is summarized by the likes of Nomura's Lewis Alexander who writes:
It appears that it may be quite hard for him to rally support within his caucus for any agreement that raises tax rates.
Indeed. If Boehner couldn't even get the GOP to support a law that would let taxes revert on millionaires, how is he going to get GOP support on a deal that would let taxes revert on those making $250K or $400K, as the President would like to sign?
Here's the thing with that. Boehner doesn't need to get all of his caucus, because in the end, if Obama supports the ultimate compromise, then it's safe to say that the Democrats will bring about 100+ votes in the house to support the bill. And this was always true. It was always the case that the eventual compromise would see Boehner lose 70 or more Republicans, to be made up with Democrat support. So nothing changes on that front.
And it's true that the clock is ticking, and that politicians are about to go on holiday, but for one thing, everyone's cell phones work in their home district and have been told to be on 48-hour notice to head back to DC.
Boehner had a similar fiasco to the debt ceiling fight of 2011 (a GOP alternative that failed to pass) but that was with just 5 (!) days left before hitting the debt ceiling. Then, just as now, the ultimate vote passed with Boehner losing lots of GOPers, but gaining Democratic support. And there's twice as much time left on the clock as then. Breathe.
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