WASHINGTON – The Republican-controlled House pushed ahead Thursday with a bill that would raise taxes on people earning over $1 million a year as hopes faded for a pre-Christmas deal between President Barack Obama and Speaker John Boehner to avert the so-called “fiscal cliff.”
Democratic leaders vowed to let the House measure die in the Senate without a vote and urged Boehner to return to the negotiating table. As a grand bargain to avoid the fiscal cliff’s automatic tax hikes and spending cuts proved elusive, Senate Majority Leader Harry Reid, D-Nev., said lawmakers would return to the Capitol after the holiday to try again.
“The president and Boehner have to negotiate this, OK?” said Sen. Charles Schumer, D-N.Y. “We don’t need a vehicle. We need an agreement.”
Across the Capitol, Boehner accused Obama and his fellow Democrats of doing nothing to prevent the so-called cliff — sweeping tax hikes and spending cuts that hit in early January unless lawmakers head them off. But at the same time, he told reporters he would continue trying to strike a deal with the president.
“Our country faces serious challenges,” said Boehner, R-Ohio. “The president and I in our respective roles have a responsibility to work together to get them resolved. I expect that we’ll continue to work together.”
House Majority Leader Eric Cantor, R-Va., said the GOP has enough votes to pass the bill dubbed “Plan B” by Boehner, aimed at upping the year-end pressure on Capitol Hill Democrats and Obama.
“We, as Republicans, have taken concrete actions to avoid the fiscal cliff,” Cantor insisted at a news conference.
The White House has said Obama would veto the measure. Spokesman Jay Carney called the GOP move a fruitless step.
“Instead of taking the opportunity that was presented to them, to continue to negotiate what could be a very helpful large deal for the American people, the Republicans in the House have decided to run down an alley that has no exit while we all watch,” Carney said. “And again it’s something we’ve seen in the past.”
Republicans have told senior administration officials that Boehner decided to put forward his Plan B after he concluded he could not get enough GOP support for the proposal he made to Obama over the weekend, according to a senior administration official.
And GOP officials said that while Cantor supports Boehner’s efforts to reach a sweeping deal with Obama, other members of the leadership team recoiled at details of Boehner’s latest plan — including $1 trillion in higher taxes and a breakthrough concession on higher tax rates for those earning more than $1 million — at a meeting Monday evening. The officials required anonymity because they were not authorized to speak about the meeting.
On Wednesday, a confident Obama dismissed the GOP bill, telling reporters that he and Boehner were just a few hundred billion dollars apart on a 10-year, $2 trillion-plus deficit-cutting pact.
Republicans should “peel off the partisan war paint” and take the deal he’s offering, Obama said sharply at the White House. He noted that he had won re-election with a call for higher taxes on the wealthy, then added pointedly that the nation aches for conciliation, not a contest of ideologies, after last week’s mass murder at a Connecticut elementary school.
Obama continued to press for a comprehensive budget pact with Boehner to replace the economy-jarring set of automatic tax hikes and sweeping spending cuts to the Pentagon and domestic agencies set to take effect in January.
Boehner countered that the president will bear responsibility for “the largest tax increase in history” if he makes good on his veto threat.
But to a remarkable extent, the two sides have flip-flopped.
Republicans have for years argued that voting to renew most Bush-era tax cuts on income, investments and elsewhere, but allowing upper-end tax cuts to expire, would be a debilitating blow to the economy and small businesses. Now, they point to the 99-plus per cent of taxpayers who wouldn’t be affected by their latest tax plan.
For their part, Democrats who supported the million-dollar threshold for a tax increase not too long ago have lashed themselves to Obama. The re-elected president carries great leverage into the battle over the fiscal cliff, the price to pay for Washington’s chronic inability to address the deficit.
GOP leaders have also set a vote on a companion bill to replace across-the-board cuts in the Pentagon and some domestic programs with targeted reductions elsewhere in the budget, an attempt to satisfy defence-minded lawmakers and conservatives eager to vote for spending cuts. The Senate is sure to ignore that measure as well.
That measure, which passed the House in May only to be ignored by the Senate, would cut food stamps, benefits for federal workers and social services programs like day care for children and Meals on Wheels for the elderly. It would spare the military from a $55 billion, 9 per cent automatic budget cut next year that is punishment for the failure of last year’s deficit-reduction “supercommittee” to strike a deal. It also would protect domestic agencies from an 8 per cent cut to their day-to-day operating budgets next year, but would leave in place a 2 per cent cut to Medicare providers.
With Christmas approaching, Republicans also said they were hopeful the tax measure could quickly form the basis for a final bipartisan “fiscal cliff” compromise once it arrives in the Senate.
On paper, the two sides are relatively close to an agreement on major issues, each having offered concessions in an intensive round of talks that began late last week.
But political considerations are substantial, particularly for Republicans.
After two decades of resolutely opposing any tax increases, Boehner is seeking votes from fellow Republicans for legislation that tacitly lets rates rise on million-dollar income tax filers. The measure would raise revenue by slightly more than $300 billion over a decade than if all of the Bush-era tax cuts remained in effect.
Boehner won a letter of cramped support from anti-tax activist Grover Norquist during the day. Norquist’s organization, Americans For Tax Reform, issued a statement saying it will not consider a vote for the bill a violation of a no-tax-increase pledge that many Republicans have signed.
The talks have stalled even though Obama and Boehner have each made concessions that would seem to bring them to the brink of agreement. Obama is now seeking $1.2 trillion in higher tax revenue, down from the $1.6 trillion he initially sought. He also has softened his demand for higher tax rates on household incomes so they would apply to incomes over $400,000 instead of the $250,000 he cited during his successful campaign for a new term.
He also has offered more than $800 billion in spending cuts over a decade, half of it from Medicare and Medicaid, $200 million from farm and other benefit programs, $100 billion from defence and $100 billion from a broad swath of government accounts ranging from parks to transportation to education.
In a key concession to Republicans, the president also has agreed to slow the rise in cost-of-living increases in Social Security and other benefit programs, at a savings estimated at about $130 billion over a decade.
By contrast, Boehner’s most recent offer allowed for $1 trillion in higher taxes over a decade, with higher rates for annual incomes over $1 million. His latest offer seeks about $1 trillion in spending cuts.