Not Much of a Plan B
But the latest bit of political grandstanding in Congress might actually make it easier for Republicans and Democrats to come to an effective bargain after the holidays, writes MoneyShow's Jim Jubak, also of Jubak's Picks.
Surely you didn't expect global financial markets to react positively to last night's debacle in the House of Representatives?
Overnight, after a revolt among conservative Republican members forced House Speaker John Boehner to pull his solution to the US fiscal cliff, Hong Kong's Hang Seng index dropped 0.68% and Tokyo' Nikkei 225 index fell 0.99%.
As morning rolled across the world, the Germany Dax index declined by 0.74% and the French CAC 40 index moved 0.46% lower. In the United States as of 10 a.m. New York time, the Dow Jones Industrial Average was down 0.82% and the S&P 500 was down 1.18%.
From a cynical US perspective (and is there any other appropriate perspective on US politics these days?), it's hard to see what all the hoo-hah is about.
Boehner's Plan B-a proposal to raise the marginal tax rates for taxpayers making more than $1 million and to extend the Bush tax cuts for everyone else-was never a real proposal with a chance to pass into law in the first place. It would have been dead on arrival in the Senate, and President Barack Obama had promised to veto it.
It was a political stunt designed to embarrass Democrats-and not a particularly well-designed one to begin with.
And to even get the bill to a chance of passage in the theoretically Republican-controlled House, Boehner had to load it up with all kinds of spending cuts-to food stamps, for example-designed to appeal to the most conservative Republicans.