The juiciest passage in the Wall Street Journal’s behind-the-scenes report on the fiscal cliff negotiations comes when House Speaker John A. Boehner (R-Ohio) asks President Obama whether he can have the deal he rejected in 2011. “You missed your opportunity on that,” the president replies. 
 
 Ouch. 
 
 But the most important insight into the White House’s strategic thinking comes when Boehner says to the president, ”I put $800 billion [in tax revenue] on the table. What do I get for that?” Obama’s response is cold and telling. ”You get nothing,” the president said. “I get that for free.” 
 
 That, right there, is the central fact of negotiations for the Democrats and the central problem for the Republicans. At the end of this year, more than $5 trillion in scheduled tax increases begin. But the White House doesn’t believe that’s real revenue. Democrats in Congress won’t permit that kind of a tax increase on ordinary Americans. The White House won’t permit that kind of a tax increase on ordinary Americans. 
 
 But they’re certain they can hold onto almost $800 billion of it. The Senate already passed a bill letting the Bush tax cuts lapse for income over $250,000. That bill is very, very popular. The White House expects that if we go over the cliff, the House will have to pass that bill, too, and the president would have little choice but to sign it. That bill raises taxes by a bit more than $700 billion, which is less than the $1.6 trillion the White House wants. But that $700 billion, to the White House, is the baseline: If they get nothing else, they will certainly get that. 
 
 And that’s why Boehner’s offer of $800 billion doesn’t impress. The White House already has some $700 billion in the bank, as they see it. The reason to negotiate with Boehner is that an agreement with him could, in theory, push that number well above $1 trillion while stabilizing the debt and avoiding the economic pain of falling off the fiscal cliff. But there’s no reason to cut a deal with Boehner in which the White House gives up spending cuts in order to get a tax increase they can have anyway. 
 
 The talk in Washington now is about a “small deal.” That would likely include the Senate tax bill, some policy to turn off at least the defense side of the sequester and a handful of other policies to blunt or delay various parts of the fiscal cliff. 
 
 That’s not a very good deal for the short-term health of the economy. Depending on how much of the fiscal cliff gets delayed, we could tip into recession anyway. But it could lead, in the end, to much more revenue than a “big deal” now. 
 
 Here’s how it would go. Some time in the next month or so, the small deal would pass and the White House would pocket that $700-plus billion in tax revenue. They really would get that for free, just as the president told Boehner. 
 
 But pressure would quickly mount to strike a larger deal, both because there would be another fiscal cliff coming and because the debt ceiling would need to be raised. (The White House swears they won’t negotiate over the debt ceiling, but it’s not exactly clear what that will mean in practice.) 
 
 The White House would insist that the next deal includes a 1:1 ratio of tax increases — all of which could come through Republican-friendly tax reform — to spending cuts. So a subsequent deal that included $600 billion or $700 billion in spending cuts would also include $600 billion or $700 billion in tax increases, leading to total new revenue in the range of $1.2 trillion to $1.4 trillion. 
 
 There’s precedent for this. After the 2010 midterms, Republicans forced the passage of the Budget Control Act, which included more than a trillion dollars in spending cuts and no offsetting tax increases. They’ve subsequently refused to count those cuts toward any future deals. If the president, after winning the 2012 election, pocketed $700 billion in tax increases and insisted that revenue was unrelated to the next negotiation, he’d simply be following Boehner’s lead. 
 
 All of which is to say, if Boehner had taken the White House’s deal in 2011, he could’ve stopped the tax increase at $800 billion. If he took their most recent deal, he could stop it at $1.2 trillion. But if he insists on adding another round to the negotiations — one that will likely come after the White House pockets $700 billion in tax increases — then any deal in which gets the entitlement cuts he wants is going to mean a deal in which he accepts even more tax increases than the White House is currently demanding. 
 
 Today, Boehner wishes he’d taken the deal the president offered him in 2011. A year from now, he might wish he’d taken the deal the president offered him in 2012. ||||| WASHINGTON—Congressional leaders and President Barack Obama called Friday for a return to negotiations to avert the so-called fiscal cliff, a day after talks cratered in a very public fashion when Republicans abandoned House Speaker John Boehner's backup plan. 
 
 In truth, talks to secure a big deficit-reduction deal had already broken down Monday afternoon in the office of Mr. Boehner (R., Ohio), a Wall Street Journal reconstruction shows. Mr. Boehner had been negotiating a deal with the White House to let tax rates rise for upper-income people. 
 
 Mr. Boehner, irritated with the White House, was finding it hard to keep his troops in line as details of his negotiations with Mr. Obama leaked out. In the speaker's office just off the Capitol's majestic rotunda that afternoon, he told his top lieutenants that he was already thinking about a pared-down backup plan. "In the absence of an agreement, 'Plan B' is the plan," he told his deputies, according to a script he read them that afternoon. 
 
 Enlarge Image Close Charles Dharapak/Associated Press President Barack Obama, pictured, and Majority Leader Eric Cantor failed to see eye to eye on talks to resolve the looming fiscal deficit, which broke down this week amid growing acrimony on both sides 
 
 Enlarge Image Close AP Speaker of the House John Boehner and House Majority Leader Eric Cantor 
 
 Enlarge Image Close J. Scott Applewhite/Associated Press Eric Cantor 
 
 One by one, they came out in favor of Plan B and against the broader deal. 
 
 House Ways and Means Chairman Dave Camp (R., Mich.) said the new tax revenue the broader plan called for was too high. Then Budget Chairman Paul Ryan (R., Wis.), whom Mr. Boehner had spent weeks wooing, said he couldn't sign on because it didn't make structural changes in entitlements. 
 
 The speaker went ahead with Plan B, which collapsed Thursday night before he could even bring it to a vote, leaving talks at a perilous standstill just days before the year-end fiscal-cliff deadline. Even if an agreement can be reached by then, both sides expect it to be a small package doing little to tackle the long-term budget woes and deferring the battle until next year. 
 
 A review of the negotiations, based on interviews with a dozen aides and lawmakers, suggests the problems lay in Mr. Boehner's inability to coax his rank-and-file to support a deal that raises taxes on higher-income Americans. Another factor was what Republicans saw as President Obama's unwillingness to bend when a deal was in sight, jamming the speaker with a deal his party couldn't swallow. 
 
 The negotiations offer little evidence November's election brought the president and House Republicans closer together. If anything, the talks poisoned an already distrustful relationship. 
 
 Mr. Boehner could soon face a decision whether to call for a vote on some sort of plan that could avert the cliff's spending cuts and tax increases but might imperil his position if he had to rely on Democrats to pass it. 
 
 Mr. Obama repeatedly lost patience with the speaker as negotiations faltered. In an Oval Office meeting last week, he told Mr. Boehner that if the sides didn't reach agreement, he would use his inaugural address and his State of the Union speech to tell the country the Republicans were at fault. 
 
 Falling Over the Fiscal Cliff See some scenarios for how different groups of people may be affected by the tax changes that will take place if the fiscal cliff isn't resolved by the Jan. 1., 2013, deadline. View Interactive Tracking Dividends Investors are seeing a jump in the number of companies making big one-time payouts to stem a possible increase to the dividend-tax rate. See which companies have announced special dividends. View Interactive More photos and interactive graphics 
 
 At one point, according to notes taken by a participant, Mr. Boehner told the president, "I put $800 billion [in tax revenue] on the table. What do I get for that?" 
 
 "You get nothing," the president said. "I get that for free." 
 
 After the election, Boehner aides tried to shape the debate by offering early concessions, including that the GOP would agree to raise new tax revenue. A speech Mr. Boehner planned to give was rewritten 18 times and included input from top Republican leaders. 
 
 He and Mr. Obama didn't sit down together for another 10 days. The session began genially. But tension quickly emerged over the president's call to include increasing the U.S.'s borrowing limit in any final package. 
 
 Responded Mr. Boehner: "I've found in my life that everything I've ever wanted has come with price." 
 
 Mr. Obama told the speaker he wasn't willing to play games with the debt ceiling. 
 
 Staffs got to work on the outline of a deal. In their first offer, Republicans wanted to essentially preserve Bush-era rates set to expire Dec. 31 while raising some new revenue through a tax overhaul in 2013. The White House made clear it wouldn't agree to a plan that didn't raise some tax rates immediately. 
 
 Brett Loper, the speaker's top policy aide, prodded White House officials to look for tax revenue elsewhere. In phone calls and meetings, he steered them to tax shelters and suggested limiting deductions for tax-exempt municipal bonds. 
 
 National Economic Council Director Gene Sperling told Mr. Loper it was impossible to hit revenue targets without raising tax rates. 
 
 At one point, Mr. Loper said, "I'm asking you for help. Are you going to help me or not?" 
 
 Last August, President Obama and Congress put the U.S. economy on course to go over a "fiscal cliff." WSJ's David Wessel tells you everything you need to know about the "cliff" but were afraid to ask. 
 
 Stocks sank as investors confronted a new level of budget disarray in Washington, but the market was on pace to notch gains for the last full trading week of the year. Brendan Conway has details on The News Hub. Photo: Associated Press. 
 
 Political analyst Charlie Cook looks back on the year in politics. WSJ reporters assess the state of the fiscal cliff talks and discuss the chances of gun control legislation in the wake of the school shootings in Connecticut. 
 
 The quest to avert the fiscal cliff is as uncertain as ever after rival plans were rejected. WSJ reporters break down how the negotiations will play out from this point on. 
 
 Paul Vigna discusses the market fallout from the collapse of a fiscal-cliff deal in Washington with Damian Paletta and Steven Russolillo. Photo: Getty Images. 
 
 Clemency Burton-Hill discusses the latest on the fiscal-cliff negotiations with Andrew Ackerman, and Jack Nicas looks at the millions of mental-health records missing from gun-dealer databases. Photo: AP. 
 
 Shortly after, aides to Mr. Boehner suggested he call the president. 
 
 Columnist Mary Anastasia O'Grady on the failure of Boehner's Plan B. Photo: Pool 
 
 Mr. Obama insisted on raising tax rates for those with household income above $250,000. The House GOP wanted significant spending cuts and fundamental changes to Medicare and other entitlement programs in exchange for new tax revenue. 
 
 The president repeatedly reminded Mr. Boehner of the election results: "You're asking me to accept Mitt Romney's tax plan. Why would I do that?" At another point, the speaker noted his GOP majority would also return next year. 
 
 The White House's first formal offer, presented Nov. 29 left Mr. Boehner incredulous. It included a request for $1.6 trillion in additional tax revenue over 10 years, a permanent increase in the debt ceiling and money for road projects and other year-end priorities. In return it offered spending cuts of $400 billion—25 cents for each dollar in new revenue. 
 
 Taking a drag on his cigarette, Mr. Boehner asked Treasury Secretary Timothy Geithner, who had presented the plan, a number of questions but didn't fully engage him. Across the Capitol, Senate Minority Leader Mitch McConnell (R., Ky) said he laughed at the offer. 
 
 The same sticking points kept rearing up—the White House insisting on more tax revenue than Republicans could stomach, and the Republicans demanding deeper cuts than the White House would accept. 
 
 During one session in the Capitol with White House's legislative liaison Rob Nabors, Mr. Loper from the Boehner camp asked, referring to a near-deal during last year's debt-ceiling fight: "Can you get back into the zone of where you were in July 2011?" 
 
 "No," Mr. Nabors replied. "We were probably overextended then, and there's no way we would do it now." 
 
 Mr. Nabors said if they couldn't reach a deal, they should keep lines of communication alive. The typically serious Mr. Loper asked, "So, you're breaking up with us?" 
 
 On Dec. 13, Mr. Boehner went to the White House at the president's request, joking he was going to the woodshed. 
 
 The president told him he could choose one of two doors. The first represented a big deal. If Mr. Boehner chose it, the president said, the country and financial markets would cheer. Door No. 2 represented a spike in interest rates and a global recession. 
 
 Mr. Boehner said he wanted a deal along the lines of what the two men had negotiated in the summer of 2011 in a fight over raising the debt ceiling. "You missed your opportunity on that," the president told him. 
 
 That night, the speaker and Majority Leader Eric Cantor (R., Va.) decided to make the biggest concession so far. 
 
 As the country the next day digested news of a brutal school shooting in Connecticut, Mr. Boehner called the president and for the first time offered to let tax rates rise—on income above $1 million. The president acknowledged the concession but said Mr. Boehner's plan wasn't raising enough revenue. 
 
 News broke the next night both about the concession and that the speaker was willing to extend the borrowing limit. On Sunday, the White House sent a plane to fly Mr. Boehner back to Washington for a morning appointment with the president on Monday, the day it now appears the deal fell apart. 
 
 In that session, the president held firm for $1.2 trillion in additional tax revenue, a second step down from his original offer. Mr. Boehner asked for another $100 billion in spending cuts but couldn't get a commitment. 
 
 Finally, the speaker said, "Well, you and I can sit here and stare at each other," or he could leave and they would talk later. 
 
 Back in the Capitol, Mr. Boehner told Mr. Cantor the president wasn't moving. They agreed to call him. On the call, Mr. Boehner restated he needed $1 in spending cuts for every $1 in revenue raised. He dropped a prior demand to increase the Medicare eligibility age. 
 
 The president told Mr. Boehner that he was willing to make some concessions on taxes and spending, but cautioned that they needed to retain Democratic votes for the bill to pass. 
 
 The speaker raised the prospect of moving a backup bill. White House officials said Mr. Boehner didn't reveal what Plan B comprised. Administration officials expected a few more days of back-and-forth, but the speaker thought the prospects were dim for a big deal. 
 
 Meeting with his leadership team in the afternoon, Mr. Boehner read from a script prepared by his staff, telling lawmakers he still wanted a big deal but the rank and file needed to know the plan by a 9 a.m. conference meeting the next morning, Tuesday. He encouraged his colleagues to accept the backup plan. 
 
 "I'm going to keep the proposal on the table," he said of the broader deal. "As I told the president, I'm not making an ultimatum. The offer stays on the table, even if we move on Plan B." 
 
 His lieutenants made clear they preferred Plan B to the one Mr. Boehner was trying to broker. 
 
 The speaker called the president with news the House would move ahead with the backup bill, which would preserve Bush-era rates for all income below $1 million. The president was incensed. 
 
 As the week progressed, support didn't materialize, with some GOP members complaining that the bill raised taxes and others that it didn't have enough spending cuts. Mr. Boehner pulled it Thursday night and read the Serenity Prayer to members, whom he then dismissed. 
 
 On Friday afternoon, the president spoke to both Mr. Boehner and Senate Democratic leader Harry Reid in a bid to resurrect a deal. Soon afterward he left the White House for his annual family vacation in Hawaii. 
 
 Write to Peter Nicholas at peter.nicholas@wsj.com 
 
 A version of this article appeared December 22, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: How 'Cliff' Talks Hit the Wall. ||||| Boehner: I’m not open to tax hikes, but I am open to new revenue 
 
 posted at 5:21 pm on November 7, 2012 by Allahpundit 
 
 The media’s hyperventilating over this as an early sign that the House GOP has been chastised by last night’s presidential/Senate whupping. (WaPo.com’s front-page headline: “A quick pivot after election.”) But … isn’t this always what Boehner says when asked about a grand bargain? 
 
 Republicans are “willing to accept new revenue” to tame the soaring national debt and avert an ugly battle over the approaching “fiscal cliff,” House Speaker John A. Boehner said Wednesday in a speech that offered a potential path to compromise in year-end budget negotiations… In exchange, however, Boehner said Democrats must not “continue to duck the matter of entitlements,” referring to the rising cost of Social Security and federal health programs, which he called “the root of the problem.” 
 
 Here’s what he said in April 2011, three months after becoming Speaker: 
 
 If considering revenue increases leads to a big 2012 budget deal for Republicans then so be it, Speaker John Boehner told me. “I’ll put everything on the table. I think Washington has a spending problem. I don’t think it has a revenue problem. I’m not interested in raising taxes on the American people. But if it takes leaving it on the table to have the conversation, I’ll have the conversation,” he told me. 
 
 Here he is in November 2011: 
 
 “There’s room for revenue but there clearly is a limit to the revenues that may be available” to help reach the congressionally mandated target of cutting government deficits by at least $1.2 trillion, Boehner, an Ohio Republican, told reporters yesterday in Washington… “Without real reform on the entitlement side, I don’t know how you put any revenue on the table,” Boehner said. The speaker said he “made this clear” to President Barack Obama during failed negotiations on deficit-reduction bargain in July. 
 
 Annnnnd here he is in June of this year, in the course of comparing raising new revenue to giving a drug addict another fix: 
 
 The Speaker replied: “Well, in negotiations with the president, I had additional revenues on the table. Revenues out of economic growth. Revenues out of a more efficient tax system. Revenues out of what I’ll call opportunity costs from having certainty about what the tax code looks like.” But Boehner appeared to shut the door on raising taxes. 
 
 He famously agreed to $800 billion in new revenue as part of a deficit deal with The One last year before O allegedly demanded more, causing the deal to collapse. So why rehash all of this today? Well, investors wet themselves this afternoon over the fact that two more years of divided government means a compromise on the “fiscal cliff” will be difficult. Now that O’s reelected, he’ll spend the next month pointing to polls on the Bush tax cuts and accusing the House GOP of ignoring the “mandate” he got on tax hikes last night. (Biden is already pushing this point specifically; Boehner, in his own speech last night, pushed back hard on it.) Today’s comments are Boehner’s way of preempting Obama and signaling to the public that he’s not opposed to all deals involving more tax revenue, just ones that involve rate hikes. His problem is that Obama “wins” a stalemate here because inaction means the current rates will lapse automatically. Granted, the higher tax rates and automatic spending cuts from sequestration would probably push the economy back into recession, but why would a lame duck like O care about that? Didn’t he just win an election by convincing the country that Mitt Romney is worse than he is? If he can convince them that Republicans caused the next recession by sticking up for the rich, he just might be able to parlay it into Democratic House gains in 2014. Elections have consequences, none more so than last night’s. 
 
 Here’s Boehner talking to CNN a few days ago about the cliff. He told them he expects they’ll reach a short-term deal to buy time for work on a grander grand bargain, hopefully involving tax code reform. 
 
 Related Posts:
– The Wall Street Journal has what it bills as a "behind scenes" look at how the fiscal cliff talks went sour this week—on Monday, to be precise—and a few passages stand out to suggest relations between the president and House Republicans may have actually gotten worse since the election: Boehner to Obama: "I put $800 billion [in tax revenue] on the table. What do I get for that?' Obama to Boehner: "You get nothing. I get that for free." At another point, Boehner told the president he wanted a deal similar to the one he rejected during their debt ceiling talks of 2011. "You missed your opportunity on that," replied the president. Eventually, an "irritated" Boehner decided to move ahead with his Plan B even while keeping the broader deal on the table. It was a decision that "incensed" the president. (Boehner eventually had to call off the vote anyway.) Read the full Journal story here. At Politico, Mike Allen says it's mostly a "rehash" of old news. But Ezra Klein at the Washington Post thinks the "I get that for free" exchange is "the central fact of negotiations for the Democrats and the central problem for the Republicans." Read his full explanation here of why Democrats think the $800 billion figure isn't what it seems. The talks, meanwhile, remain in limbo until after Christmas, when the best hope will be that the two sides can agree on a scaled-down, temporary plan.