So the White House is turning its focus to a smaller package that would extend the Bush-era tax rates on income below $250,000, pause the across-the-board spending cuts known as the sequester and renew unemployment insurance benefits, according to senior administration officials.This scenario could work using the path Boehner, inadvertently or not, gave in his Friday press conference. That would be for the Senate to take up the tax extensions bill the House already passed and substitute it with language to this effect. That would get around the House objections that revenue bills can't originate in the Senate—this one would have originated in the House.
It would hold off a significant portion of the fiscal cliff, minimizing any economic shock in the new year. But it means a host of tax provisions would likely expire, little would be done to address the debt and deficit, and no process would be set up for overhauling the tax code next year. There would be no agreement on entitlements, and none on raising the debt ceiling.
The Senate has already proven it can pass a smaller tax cuts extension bill. It's done it. Senate Minority Leader Mitch McConnell could decide to raise some hell this time, but that would be risky for him, with Republicans already taking the lion's share of the blame for this fiasco. In the House, it would need 26 Republicans, and every Democrat.
Kicking the sequester can down the road and shrinking this package is the best idea out of the negotiations yet. It means that the Congress that the people elected to lead them next year gets to make the decisions. It means that the debt ceiling is back off the negotiating table. It means that the middle class doesn't get hit with a smaller paycheck at the end of January.
It's a practical solution and a smart solution and one of few that could probably work.