Written by The Financial Express | Updated: Dec 29 2012, 08:24am hrs
Boehners Plan B failure symbolises a dangerous extremist streak in the Republicans

After a hefty refusal of President Obamas compromise proposal which sought to lift the threshold to $400,000 along with significant budget cuts (letting go off the payroll tax-break, chaining Social Security to CPI, and raising Medicare age), House Speaker, Boehner, decided to pass his own deal. This said that there would be no tax increases for those making less than a million a yearto pressure the President into raising his threshold further. Essentially, his proposal had tax-cuts for 99.81% of Americans as opposed to Obamas 98%. However, the Republican controlled House shot the deal down, because taxes on the other 1.19% were being raised.

In other words, Boehner was humiliated by his own party, while making a broader move for compromise. And this time, the guilt for averting a compromise should lie with his party. Obama clearly ran on a mandate to increase taxes on the wealthiest Americans to Clinton-era rates. His reelection, and the fact that polls consistently show majority support for higher taxes on those earning over 250,000, means that there is a mandate for tax-increase on the top 1.19% (Boehners proposal) to 2% (Obamas proposal). The refusal of the Republican Party to budge shows a dangerous ideological rigidity that may be unhealthy for American democracy.

Yet, the ball may still lie in Obamas court. If the Congress is unable to come to agreement, once the cliff starts the Democrats can come up with legislation to avert itthe most probable of them would be a tax-cut for 98% of Americans, which would be impossible for anyone to refuse.