House Republicans clear way for fiscal cliff vote-A A +A
Wednesday, January 2, 2013
WASHINGTON -- House Republicans abandoned demands for changes in emergency legislation approved by the Senate to prevent widespread tax increases and painful across-the-board spending cuts and cleared the way for a final, climactic New Year's night vote before financial markets reopen Wednesday.
The decision capped a day of intense political calculations for conservatives who control the House. They had to weigh their desire to cut spending against the fear that the Senate would refuse to consider any changes they made in the "fiscal cliff" bill, sending it into limbo and saddling Republicans with the blame for a whopping middle class tax increase.
Adding to the Republican discomfort, one Senate Democratic leadership aide said Majority Leader Harry Reid would "absolutely not take up the bill" if the House changed it. The aide spoke on condition of anonymity, citing a requirement to keep internal deliberations private.
The legislation cleared the Democratic-controlled Senate on an 89-8 vote early Tuesday, hours after Vice President Joe Biden and Senate Republican Leader Mitch McConnell, veteran negotiators, sealed a deal.
The No. 2 House Republican, Eric Cantor, emerged from a party meeting Tuesday afternoon to say, "I do not support the bill." Lawmakers indicated they wanted more spending cuts in the largely tax-focused legislation and wanted to send it back to the Senate.
Despite Cantor's remarks, the top Republican in Congress, House Speaker John Boehner took no public position on the bill as he sought to negotiate a conclusion to the final crisis of a two-year term full of them.
After intensive deliberations — a pair of rank-and-file meetings sandwiched around a leadership session, the Republican high command in the House canvassed Republican House members to see if they wanted simply to vote on the Senate measure, or whether they wanted first to try and add spending cuts totaling about $300 billion over a decade. The cuts had passed the House twice earlier in the year but are opposed by most if not all Senate Democrats.
"We've gone as far as we can go," said Republican Rep. Jack Kingston of Georgia. "I think people are ready to bring this to a conclusion, and know we have a whole year ahead of us" for additional fights over spending.
House Democrats met privately with Biden for their review of the measure, and the party's leader, Rep. Nancy Pelosi of California, said afterward that Boehner should permit a vote.
"That is what we expect. That is what the American people deserve," she said.
If the Senate bill is not passed by the House it would mean that any fiscal deal would have to start all over when a new Congress, with dozens of new members, is seated Thursday. And any change in the legislation would require the Senate to re-pass the measure before it could go to President Barack Obama for his signature. House approval of the existing bill would move it straight to the president.
The legislation at issue was only part of the grand deal Obama had hoped to make with lawmakers on addressing the country's chronic deficit spending. That means his administration and a bitterly partisan Congress face more showdowns on fiscal issues in the months ahead.
Economists, who had warned that the "fiscal cliff" of tax increases and spending cuts would spin the country back into recession, were warning that even a limited agreement to avoid it could still dent economic growth.
The deal under consideration Tuesday tackled one of the most sensitive issues: higher taxes. The measure would be the first significant bipartisan tax increase since 1990. It would prevent taxes from going up on the poor and middle class but would raise rates on households making more than $450,000 a year.
Even with enactment of the legislation, taxes are on the rise for millions.
A 2 percentage point temporary cut in the payroll tax, originally enacted two years ago to stimulate the economy, expired with the end of 2012. Neither Obama nor Republicans have made a significant effort to extend it.
The measure also would also put off for two months more than $100 billion in automatic spending cuts that were set to hit the Pentagon and domestic programs starting this week, and it would extend unemployment benefits for the long-term unemployed.
The spending cuts will have to be addressed in the coming weeks and months, along with an increase in the government's borrowing limit as it seeks to pay its bills. The midnight deadline Monday had been set back in 2011 as motivation for the Obama administration and Congress to get serious about taking sweeping action to address deficit spending that has averaged about $1 trillion a year.
Obama, who had campaigned for re-election on the promise of protecting households making under $250,000 a year from a tax increase, praised the agreement after the Senate's vote. Some liberal Democrats were disappointed that the White House did not stick to a harder line in negotiations, considering that Obama no longer faces re-election.
"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," Obama said in a statement. "This agreement will also grow the economy and shrink our deficits in a balanced way — by investing in our middle class, and by asking the wealthy to pay a little more."
But the measure was not balanced enough to shrink the federal deficit. The nonpartisan Congressional Budget Office said it would add nearly $4 trillion over a decade, a calculation that assumed taxes would otherwise have risen on taxpayers at all income levels.
The sweeping Senate vote exceeded expectations and would appear to give momentum to the measure despite lingering questions in the House, where conservative forces sank a recent bid by Boehner to permit taxes to rise on incomes exceeding $1 million, returning them to Clinton-era levels of the 1990s.
Even die-hard conservatives in the Senate endorsed the measure, arguing that the alternative was to raise taxes on virtually every earner.
"I reluctantly supported it because it sets in stone lower tax rates for roughly 99 percent of American taxpayers," said Sen. Orrin Hatch. "With millions of Americans watching Washington with anger, frustration and anxiety that their taxes will skyrocket, this is the best course of action we can take to protect as many people as possible from massive tax hikes."
Other features of the measure:
— It would raise the top tax rate on large estates to 40 percent, from 35 percent.
— Taxes on capital gains and dividends over $400,000 for individuals and $450,000 for couples would be taxed at 20 percent, up from 15 percent.
— Jobless benefits for the long-term unemployed would be extended for an additional year at a cost of $30 billion.
— Another $64 billion would go to renew tax breaks for businesses and for renewable energy purposes, like tax credits for energy-efficient appliances. (AP)