House Majority Leader Eric Cantor, R-Va., left, with Speaker of the House John Boehner, R-Ohio, head into a closed-door …Updated 7:27 pm ET
Republican House leaders are giving their fractious caucus a choice: Try to amend a fiscal cliff compromise passed in the Senate early Tuesday morning or go for a straight up-or-down vote on the original deal.
Either way, it apppeared the fate of the measure would be known Tuesday night.
A hard-fought bipartisan compromise hatched by Vice President Joe Biden and Senate Republican Leader Mitch McConnell to spare all but the richest Americans from painful income-tax hikes teetered on the edge of collapse on Tuesday as angry House Republicans balked at the package’s lack of spending cuts.
The legislation sailed through the Senate shortly after 2 a.m. by a lopsided 89-8 margin. But it landed with a thud in the House, where Republican Majority Leader Eric Cantor surprised lawmakers by coming out flatly against the deal.
Amending the Senate plan could jettison the entire deal.
At a 5:15 p.m. closed-door meeting, Cantor and Republican House Speaker John Boehner “cautioned members about the risk in such a strategy,” according to a GOP leadership aide. House Rules Committee Chairman David Dreier, emerging from the gathering, bluntly told reporters “it’s pretty obvious” that amending the legislation and sending it back to the Senate would kill it. Democrats and Republicans in the upper chamber had signaled that lawmakers there would not take up a modified version of what was already a difficult deal.
The resulting pressure on GOP leaders was immense: Absent action to avert the fiscal cliff, Americans would face hefty across-the-board income-tax hikes, while indiscriminate spending cuts risked devastating domestic and defense programs. Skittish financial markets were watching the dysfunction in Washington carefully amid warnings that going off the so-called cliff could plunge the fragile economy into a new recession.
House Republicans appeared to be rejecting a bipartisan compromise that Boehner himself asked the Senate to negotiate without him, leaving the party likely facing the lion’s share of the blame from angry voters. And final passage could require a majority of Democratic votes, a tricky thing for Boehner two days before he faces reelection as speaker.
Time was running short for another reason: A new Congress will take office at noon on Thursday, forcing efforts to craft a compromise by the current Congress back to the drawing board.
Under the compromise arrangement, taxes would rise on income above $400,000 for individuals and $450,000 for households, while exemptions and deductions the wealthiest Americans use to reduce their tax bill would face new limits. The accord would also raise the taxes paid on large inheritances from 35% to 40% for estates over $5 million. And it would extend by one year unemployment benefits for some two million Americans. It would also prevent cuts in payments to doctors who treat Medicare patients and spare tens of millions of Americans who otherwise would have been hit with the Alternative Minimum Tax. And it would extend some stimulus-era tax breaks championed by progressives.
The middle class will still see its taxes go up: The final deal did not include an extension of the payroll tax holiday. A report released by the non-partisan Congressional Budget Office Tuesday complicated matters further. It said that the Senate-passed compromise would add nearly $4 trillion to the federal deficit over 10 years.
Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.
That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing. Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.
The day-long political drama flared up when Cantor told House Republicans meeting behind closed doors Tuesday morning that he could not back the bill in its current form, aides and lawmakers leaving the discussions said. With conservatives already ready to oppose the measure over its lack of spending cuts, the majority leader’s bombshell spelled potential doom for the legislation.
“The Speaker and Leader laid out options to the members and listened to feedback,” Boehner spokesman Brendan Buck said in a statement about the discussion. “The lack of spending cuts in the Senate bill was a universal concern amongst members in today’s meeting.”
As House Republicans raged at the bill, key House Democrats emerging from a closed-door meeting with Biden expressed support for the compromise and pressed Boehner for a vote on the legislation as currently written.
“Our Speaker has said when the Senate acts, we will have a vote in the House. That is what he said, that is what we expect, that is what the American people deserve…a straight up-or-down vote,” Democratic House Minority Leader Nancy Pelosi told reporters.
Conservative activist organizations like the anti-tax Club for Growth warned lawmakers to oppose the compromise. The Club charged in a message to Congress that “this bill raises taxes immediately with the promise of cutting spending later.”
Efforts to modify the first installment of $1.2 trillion in cuts to domestic and defense programs over 10 years -- the other portion of the “fiscal cliff,” known as sequestration -- had proved a sticking point late in the game. Democrats had sought a year-long freeze but ultimately caved to Republican pressure and signed on to just a two-month delay while broader deficit-reduction talks continue.
That would put the next major battle over spending cuts right around the time that the White House and its Republican foes are battling it out over whether to raise the country's debt limit. Republicans have vowed to push for more spending cuts, equivalent to the amount of new borrowing. Obama has vowed not to negotiate as he did in 2011, when a bruising fight threatened the first-ever default on America's obligations and resulted in the first-ever downgrade of the country's credit rating. Biden sent that message to Democrats in Congress, two senators said.
“This agreement is the right thing to do for our country and the House should pass it without delay,” President Barack Obama said in a written statement shortly after the Senate vote.
There were signs that the 2016 presidential race shaped the outcome in the Senate. Republican Senator Marco Rubio, widely thought to have his eye on his party’s nomination, voted no. Republican Senator Rand Paul, who could take up the libertarian mantle of his father Ron Paul, did as well.
Biden's visit -- his second to Congressional Democrats in two days -- aimed to soothe concerns about the bill and about the coming battles on deficit reduction.
“This is a simple case of trying to Make sure that the perfect does not become the enemy of the good,” said Democratic Representative Elijah Cummings, one of the chamber’s most steadfast liberals. “Nobody’s going to like everything about it.”
Asked whether House progressives, who had hoped for a lower income threshold, would back the bill, Cummings said he could not predict but stressed: “I am one of the most progressive members, and I will vote for it.”
