US House puts off 'fiscal cliff' vote
2012-12-21 07:28
Washington - Republicans in the House of Representatives,
confronted with a revolt among the party's rank and file, abandoned a vote on Thursday
night on politically-charged but symbolic legislation aimed at averting a
fast-approaching "fiscal cliff", after failing to gather enough
support for a measure meant to strengthen the party's position ahead of final
negotiations with President Barack Obama.
The abrupt turn of events left precious little time for a
divided government to prevent across-the-board tax increases and deep spending
cuts from taking effect with the new year. Economists say the combination
threatened a return to recession for an economy that has been recovering slowly
from the last one.
House Speaker John Boehner's so-called Plan B legislation
was drafted unilaterally by Republicans who control the House and faced sure
defeat in the Democrat-held Senate.
Tax cuts expiring
It was crafted to protect almost all Americans from the
expiration of Bush-era tax cuts on 1 January 2013, but would have let rates
increase for people earning more than $1m annually - much higher than Obama's
proposed $400 000 threshold. But Boehner's offer violated long-standing
Republican anti-tax orthodoxy and triggered the opposition of fiscal
conservatives.
In a brief statement, Boehner said the bill "did not
have sufficient support from our members to pass" and challenged Obama and
Democratic Senate majority leader Harry Reid to work on legislation to avert
the fiscal cliff.
The White House, in a statement released a short while
later, said the president's "main priority is to ensure that taxes don't
go up on 98% of Americans and 97% of small businesses in just a few short days.
The president will work with Congress to get this done and we are hopeful that
we will be able to find a bipartisan solution quickly that protects the middle
class and our economy".
Emerging from a hurriedly-called evening meeting of House
Republicans, Congressman Steve LaTourette said Boehner had told lawmakers,
"He's going to call the president and he's going to go down and talk to
him and maybe they can hammer something out."
The House will not meet again until after Christmas, if
then, and the Senate is expected to meet briefly on Friday, then not reconvene
until next Thursday.
The fiscal cliff has dominated the postelection session of
Congress that now seems certain to extend well beyond Christmas. More broadly,
it marks the end of a tumultuous two-year period in which dozens of
conservative Republicans roared into the House demanding lower taxes, yet now
find themselves two years later called on by their own leadership to raise
rates on upper incomes.
Compromise
Earlier in the week, Boehner and Obama had significantly
narrowed their differences on a compromise to avoid the fiscal cliff. But Republican
officials said that members of the party's leadership had balked at the terms
that were emerging.
Boehner, chastened by Obama's re-election and facing
pressure from some Republicans who want to make a deal, has ignored a
quarter-century of conservative dogma by offering to raise income tax rates,
even if only the richest Americans would be affected.
Obama, eager for a budget deal that would let him move on to
other issues, has in turn made concessions, offering to cut the growth of
Social Security pensions, an issue usually off-limits to Democrats. By offering
to impose tax increases on those with incomes over $400 000, Obama has
retreated from what he campaigned on: the $200 000 income ceiling on
individuals and $250 000 on couples.
That means both the president and speaker have angered
lawmakers and staunch supporters of their respective parties, just when the
need to retain that support is crucial.
Hence Boehner's Plan B vote, which was meant to rally the
Republican troops. Along with preventing tax hikes for 99.81% of Americans,
according to Boehner, it avoided cuts to the defence budget, a Republican red
line, by cutting social programmes cherished by Democrats, such as food
vouchers and the landmark health care law that Obama signed earlier in his
term.
Working together
"When you walk into a room and represent a group and
you have to give ground to get a deal, you have to stay in that room as long as
you can and you have to walk out with blood on your brow," said Joseph
Minarik, research director for the Committee for Economic Development and a
veteran of gruelling budget talks as a former Clinton White House and House
Democratic aide. "Otherwise, the people outside the room don't believe
you've fought hard for them."
Asked at a news conference a few hours before the scheduled
vote, Boehner hinted broadly that no matter what became of the legislation he
placed before the House, it will not be the end of the attempt to keep the
economy from reaching the fiscal cliff.
"I expect that we'll continue to work together,"
he said.
Obama made it clear on Wednesday that he, too, is prepared
for further negotiations, and numerous officials in both parties in the Senate
predicted that might happen quickly.
Obama wants to raise taxes by about $20bn a year more than
Boehner. That's real money by most measures, but such numbers are barely
noticeable compared to the $2.6 trillion the government is projected to collect
next year, and to the $3.6 trillion it's expected to spend.
Despite their differences, the numbers being proposed by
Obama and Boehner are so close, and the political risks both men have taken on
taxes and Social Security benefits are so stark, that many analysts consider it
almost unthinkable that they would not eventually complete a deal.
"Having come out of their trenches, they either have to
shake hands or get shot, maybe by their own troops," said Robert Bixby,
executive director of the nonpartisan Concord Coalition, an anti-deficit group.
- AP
