Boehner Scraps Fiscal Cliff Plan "B", Futures Plunge; Why the Surprise?

Lacking Republican support, House speaker John Boehner scraps Fiscal Cliff Plan "B", not that it ever had a chance in the first place.

Representative Rob Bishop of Utah says "The odds go up that we go over the fiscal cliff".

S&P Futures



S&P futures are fluctuating around -20 points or so, but are up 30 points from the initial massive reaction.

Boehner Scraps Fiscal Cliff Plan "B"

Please consider House Scraps Vote on Boehner’s Tax Plan Lacking Support

House Republican leaders canceled a planned vote tonight on Speaker John Boehner’s plan to allow higher tax rates for annual income above $1 million amid stalled budget talks.

“The House did not take up the tax measure today because it did not have sufficient support from our members to pass,” Boehner, an Ohio Republican, said in a statement. “Now it is up to the president to work with Senator Reid on legislation to avert the fiscal cliff." Harry Reid, a Nevada Democrat, is Senate majority leader.

Boehner said he will call President Barack Obama, said Representative Steven LaTourette of Ohio. A House leadership announcement said the chamber will hold no more votes until after the Christmas holiday and will return "when needed."

"The odds go up that we go over the fiscal cliff," said Representative Rob Bishop of Utah, a Republican. Texas Republican Joe Barton said, "It was just too big a hill to climb."

Why the Surprise?

Does anyone find the cancellation of the vote a surprise? If so, why?

As I have pointed out for days, "Plan B" had no chance of passing the Senate, so it made no difference even if it passed the House.

Here is a clip from a post I did on Tuesday titled Boehner Floats Fiscal Cliff "Plan B".

Significant Differences

• There is a huge gap between $400,000 and $1,000,000 on tax hikes.
• There is a huge gap between $400 billion and a $trillion on entitlement cuts.
• Boehner wants a debt-ceiling deal to include spending cuts for every dollar upped.

Nothing has changed since Tuesday, at any point. Yet, for some reason the market seems surprised by all of this.

For the conspiratorial folks, this is a Wall Street staged event to get Congress to do what it wants.

Regardless, assuming the futures hold, this may be one of the biggest "bull traps" in history.

Nothing would surprise me at the moment, including a "green" open tomorrow morning or a gap down that takes out the low on the overnight futures at 1391, nearly a 60 point plunge from Thursday's close.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com