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House Republicans sharply divided on 'fiscal cliff' deal

January 01, 2013|By Morgan Little and Lisa Mascaro
  • House Speaker John Boehner, center, departs a Republican caucus to discuss the terms of the "fiscal cliff" deal.
House Speaker John Boehner, center, departs a Republican caucus to discuss… (Jim Lo Scalzo / EPA )

WASHINGTON -- A sharply divided House Republican leadership struggled to reach agreement on a measure to avoid part of the so-called “fiscal cliff,” as key members said they could not support the compromise approved early Tuesday by the Senate.

In a closed-door meeting of Republican House members, Rep. Eric Cantor of Virginia, the No. 2 Republican in the chamber, said he could not support the Senate-passed bill, according to two GOP lawmakers. Other Republicans said the bill would have to be amended and returned to the Senate.  

Rep. Spencer Bachus (R-Ala.), chairman of the Financial Services Committee, emerged from the meeting saying he would "shocked" if House doesn't amend the bill this afternoon and send it back to Senate.

"We're building a consensus that we have to address spending," he said. "The president won his election; I also won my election.”

Such a plan would likely stall the bill for an indefinite period, as the Senate has gone into recess. The new Congress convenes on Thursday at noon. Further delays would be necessary if legislative action is not completed by then.

QUIZ: How much do you know about the fiscal cliff?

Under existing law, tax rates on nearly all Americans went up on Tuesday. The impact of those new tax rates won’t be felt for a few days, but if Congress does not act to roll them back, economists have projected that the higher rates, coupled with spending cuts that also have taken effect, might be enough to tip the economy back into recession.

The Senate bill dealt only with the tax aspects of the year-end fiscal deadline. It rolled back income tax increases on all but the wealthiest Americans, limiting the hikes to individuals with incomes over $400,000 and couples with incomes over $450,000. But the bill deliberately did not address the spending side of the ledger, leaving that to a further debate over the next couple of months. That was one of several aspects of the bill causing problems among House Republicans.

“The lack of spending cuts in the Senate bill was a universal concern amongst members,” said Brendan Buck,  spokesman for House Speaker John A. Boehner of Ohio. “Conversations with members will continue throughout the afternoon on the path forward.”

Conservatives in the House objected to several parts of the bill that were key to gaining support of Democrats in the Senate, including the renewal of tax breaks for low-income Americans that were a top priority of President Obama.

Influential outside groups sent Republicans mixed signals. Grover Norquist, author of the pledge against tax increases that most Republican members of Congress have signed, recommending that the GOP fall in line and vote for the bill, while various tea party groups and the Heritage Foundation called for opposition.

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The official cost estimate by the Congressional Budget Office was also adding to the challenge of mustering Republican votes. The tax increases and spending cuts in the “fiscal cliff” would sharply reduce the deficit – too sharply in the eyes of most economists. By comparison with those measures, the Senate-passed legislation would make the deficit worse by nearly $330 billion for the 2013 fiscal year, and just shy of $4 trillion over the course of the next decade.

The main items that add to the deficit – at least in comparison with existing law – are the decisions to keep taxes low on 98% of American households and a permanent adjustment of the Alternative Minimum Tax to keep it from affecting millions of additional taxpayers.

Earlier in the day, Vice President Joe Biden held a closed-door session with Democratic members in which he called for party members to support the Senate bill despite their own concerns over elements of the bill.

Many liberal Democrats think the threshold the bill set for tax increases was too high. But House Minority Leader Nancy Pelosi (D-San Francisco) categorized the bill as “gigantic progress,” and called for Republicans to give it an up-or-down vote.

“Up until now, our speaker has said when the Senate acts, we will have a vote in the House,” Pelosi said.

Staff writer Michael A. Memoli contributed to this report

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mike.memoli@latimes.com

Twitter: @mikememoli

lisa.mascaro@latimes.com

Twitter: @lisamascaroindc

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