Fractious GOP House Passes Senate Tax 'Cliff' Bill
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By Josh Boak and
The Fiscal Times
January 2, 2013

GOP civil war broke out on Capitol Hill during New Year’s Day as House Republicans initially spurned a Senate-passed fiscal cliff deal brokered by Senate Republican Leader Mitch McConnell of Kentucky and Vice President Joe Biden.

But their own amended version of the deal—inserting roughly $300 billion in spending cuts over the next decade—could not amass the needed 217 votes, forcing a yes-or-no roll call on the original Senate bill that cleared the House 257 to 167. 

Obama saluted Boehner for siding with the minority of his caucus to pass the agreement. "There is a path forward, if we focus not on politics, but on what's right for the country," the president said, adding that he would not entertain the same degree of turmoil in the weeks ahead as Congress addresses sequestration and the debt ceiling.

The late night action followed a series of emergency closed-door sessions of House Republicans, where Speaker John Boehner and Majority Leader Eric Cantor heard angry complaints about the budget and tax deal to avert the fiscal cliff that overwhelmingly passed the Senate, 89 to 8, in the wee hours of Monday morning. Dozens of House Republicans mocked the deal for being light on deficit reduction, with some cha257 ystising the 70-year-old McConnell for going along with a bad deal.

Rep. Steve LaTourette, R-Ohio, told multiple reporters that Senate Republicans and Democrats might have been drunk when voting Tuesday at 2 a.m. “We should not take a package put together by a bunch of octogenarians on New Year’s Eve,” declared LaTourette, who is retiring and claimed he was willing to hold his nose and vote for the Senate deal as is.

Yet as the day wore on, many rank-and-file House Republicans dwelt on the consequences of supporting a bill that would quickly die in the Senate. Wary of provoking a public outcry over a massive tax increase affecting almost every American, 85 GOP Congressmen relented and voted in favor of the Senate-passed plan.

The deal came about because 39 Republican senators joined with the Democratic majority to support a compromise that was frantically crafted by Biden and McConnell beginning last Saturday afternoon, when negotiations between McConnell and Senate Majority Leader Harry Reid, D-Nev., had hit a wall. The compromise that emerged would avert the threat of a fiscal calamity by extending lower, Bush-era tax rates for families with incomes below $450,000 and delaying deep automatic spending cuts for two months.

President Obama declared victory before sunrise on Tuesday, but the rare showing of bipartisanship quickly gave way to resistance in the House.

HOUSE WARS
The GOP concerns were couched along the lines of a generational conflict, with the 59-year old Texas Rep. Louie Gohmert scolding his slightly more ossified colleagues in the Senate. “We’re taking up a bill that will not do anything to cut spending,” the Republican said in a floor speech. “I’m embarrassed for this generation.  The future generations deserve better.”

The dispute reflects a basic tension within the Republican circles: Is it better to cling fast to the conservative principles of a drastically smaller government that charges less in taxes, or compromise with political rivals to avoid an economic disaster? But the nastiness was surprising at a time when voters are calling for unity and the financial markets are jittery.

“I guess incivility knows no bounds,” Robert Bixby, executive director of the pro-deficit reduction Concord Coalition, told The Fiscal Times. “It’s certainly not the grand bargain I would have looked for, but there doesn’t appear to be any great deals in the offing. Time is running out, and if they’re going to do anything, they better do it now.”

Without another viable option available, congressional Republicans backed down. Boehner spent part of the day huddled with his defiant caucus—searching to see whether there was a majority within his majority to support any plan. The proposed savings in the amendment floated Tuesday afternoon came from cracking down on fraudulent use of food stamps and reductions to Medicaid and ObamaCare—clear nonstarters with Democrats.

The Ohio congressman had previously deferred to the Senate after his own “Plan B” alternative—which continued the expiring tax rates on incomes below $1 million—failed to get adequate support from his colleagues.

After “Plan B” went bust on Dec. 20, Boehner issued a statement shortly before Christmas that said, “Now it is up to the president to work with [Senate Majority Leader Harry Reid] on legislation to avert the fiscal cliff. … The Senate must act now.”

But Boehner had never committed to fully supporting what emerged from the Senate. House Majority leader Cantor, R-Va., vowed Tuesday to oppose the Senate-passed deal, a sign that the party’s tension comes from within the congressional hierarchy as well as any of the Tea Party fringes.

House Minority Leader Nancy Pelosi angrily called for a simple yes-or-no vote on the Senate offer—which would technically expire on Thursday when the new 113th Congress is sworn-in. Her proposal required Boehner to rely on Democrats to pass the legislation, something he has historically been loath to do. Except this time, he had no other choice.

Rep. Steve Israel, D-N.Y., said there was “a critical mass of Democrats” willing to join with House Republicans to pass the Senate compromise. “There are some, including myself, who have some concerns about this. But as the vice president said . . .it’s like any classic compromise. At the end of the day nobody is entirely happy. But what would make America completely unhappy is if we just vote against this thing and go off the cliff.”

The GOP protests were vindicated in part by a Tuesday afternoon projection by the Congressional Budget Office that the measure would add roughly $4 trillion to deficits projected over the next decade. That projection is relative to a baseline in which all of the George W. Bush-era tax rates would have expired—a massive tax hike for the entire country that would reduce the national debt but throw the economy into a downturn.

Rep. Mick Mulvaney, R-S.C., walking into the first of two closed-door meetings of GOP House members, said the bill violated Obama’s pledge to present a “balanced deal....This raises taxes and raises spending.’’

However, some of the increase in deficits comes from permanently patching the Alternative Minimum Tax—and GOP proposals to indefinitely extend all of the soon-to-lapse tax breaks would have similarly pushed up the national debt.

NEXT ON TAP: THE DEBT CEILING
More importantly, the Senate deal was only one component of a broader series of agreements. Congress still needs to raise the $16.4 trillion debt ceiling, or else the government will default on its debt by March—an inflection point that several GOP senators such as Lindsey Graham of South Carolina and Bob Corker of Tennessee say will help them negotiate the desired spending cuts.

But what drove the vote and the Senate compromise were anxieties about the consequences of plunging straight off the cliff without anything to break the economy’s potential fall.  The political fallout for Republicans would be crippling on a national scale, even if some GOP lawmakers felt safe in their districts. On the line as they voted were more than two million jobless Americans who would lose their unemployment benefits, and a stock market on the verge of a panic that just might have swallowed retirement savings.

“My district can’t afford to wait a few days and have the stock market go down 300 points tomorrow if we don’t get together and do something,” said Rep. Steve Cohen, D-Tenn.  “And people in my district need unemployment compensation and they will know in the future they will have that. . . It’s important that we keep this country moving in the right direction and away from another recession.”