House May Vote on Revised 'Cliff' Bill and Send It Back to Senate
Washington's last-minute scramble to step back from a recession-inducing "fiscal cliff" shifted to the Republican-controlled House of Representatives on Tuesday after the Senate approved a bipartisan deal to avoid steep tax hikes and spending cuts.
In a rare New Year's session at around 2 a.m. EST (0700 GMT), senators voted 89 to 8 to raise some taxes on the wealthy while making permanent low tax rates on the middle class that have been in place for a decade.
Note: U.S. stock-market futures are closed Tuesday due to the New Year's holiday and will re-open at 6am ET Wednesday, according to the CME website.
The bill's prospects were less certain in the House, where both parties discussed it but a vote had not yet been scheduled.
"We had a frank discussion. Right now our members are in thoughtful deliberation and continuing to review the legislation and weighing the pros and cons," House Minority Leader Nancy Pelosi said.
"We've made gigantic progress," Pelosi said. "I hope we can have a bipartisan effort as we go forward."
Many conservative Republicans have rejected tax increases on any Americans, no matter how wealthy. Some liberal Democrats were also upset with a complex deal that they thought gave away too much.
House Speaker John Boehner issued a statement following the early afternoon meetings.
"The Speaker and Leader laid out options to the members and listened to feedback. The lack of spending cuts in the Senate bill was a universal concern amongst members in today's meeting. Conversations with members will continue throughout the afternoon on the path forward."
Several members of the House GOP said they are strongly leaning toward amending the bill with more spending cuts and sending it back to the Senate. Rep. Eric Cantor, the No. 2 House Republican, is said to be leaning toward rejecting the bill, saying he can't support it in its current form. Boehner sat there and listened but didn't offer his opinion.
A House member who was in the closed-door GOP meetings said 40 members spoke up and of those, 37 spoke out against the plan and three spoke for it.
That person said he felt like he was "living in another world." He said many of his GOP colleagues demanded that their leadership ask for "illogical concessions" -- things that Democrats would probably never approve at this hour. One asked Boehner to try to revive his original offer to Obama from a few weeks ago.
House leadership is holding late-afternoon meetings and buzz suggests that the House could vote tonight on an amended version of the bill that it would then send back to the Senate for a vote.
Rep. Spencer Bachus, a Republican from Alabama, said he thinks the House will likely amend the bill and send it back to the Senate.
"I would be shocked if this bill didn't go back to the Senate," Bachus said as he was leaving a GOP conference meeting.
"I think we're there on more revenue, but, you know, there is more revenues but no spending cuts."
"My recommendation would be not to take a package put together by a bunch of sleep-deprived octogenarians on New Year's Eve," said Representative Steve LaTourette, a moderate Republican from Ohio who is a close ally of House Speaker John Boehner.
The Senate called it a day late afternoon Tuesday, which means if the House opts to send a revised bill back to the Senate, the Senate wouldn't consider it until probably Wednesday.
If no deal is reached in both houses Wednesday, a new Congress is sworn in at noon Thursday and they would have to start from scratch.
Republicans could face a backlash if they scuttle the deal. Income tax rates technically rose back to 1990s levels for all Americans at midnight, and public opinion polls show Republicans would shoulder the blame if Congress fails to act.
Many conservative Republicans have rejected tax increases on any Americans, no matter how wealthy. Some liberal Democrats were also upset with the complex deal, which they thought gave away too much.
Lingering uncertainty over U.S. tax and spending policy has unnerved investors and depressed business activity for months, and lawmakers had hoped to reach a deal before Tuesday, when a broad range of automatic tax increases and spending cuts would begin to punch a $600 billion hole in the economy.
Financial markets have avoided a steep plunge on the assumption that Washington would ultimately avoid pushing the country off the fiscal cliff into a recession.
But with the New Year's Day holiday, and financial markets closed, there was no real world impact and Congress still had time to draw up legislation, approve it and backdate it to avoid the harsh fiscal measures.
"My district cannot 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," Representative Steve Cohen, a Democrat from Tennessee, said on the House floor.
The bill passed by the Senate at around 2 a.m. would raise income taxes on families earning more than $450,000 per year.
Low temporary rates that have been in place for less affluent taxpayers for the past decade would be made permanent, along with a range of targeted tax breaks put in place by President Barack Obama in the depths of the 2009 recession.
However, workers would see up to $2,000 more taken out of their paychecks as a temporary payroll tax cut was set to expire.
The bill would also delay an across-the-board 8 percent spending cut to domestic and military programs for two months, and extend jobless benefits for 2 million people who otherwise would see them run out.
The bill would raise taxes on less than 1 percent of the population, according to the nonpartisan Tax Policy Center.
However, that may be too much for conservative Republicans in the House, who last month scuttled an effort by Boehner to limit tax increases to those who earn more than $1 million. He has faced insurrections from his conservative wing in other budget showdowns over the past two years.
Republicans had hoped to include significant spending cuts in the deal to narrow trillion-dollar budget deficits. Conservatives were already looking forward to the next battle over the debt ceiling, in late February, to extract deficit reduction measures from the Democratic president.
The White House has floated $600 billion worth of spending cuts in earlier negotiations, and Obama said he would be willing to tackle deficit reduction over the coming months.
Obama in a statement on Monday urged the House to vote. "There's more work to do to reduce our deficits, and I'm willing to do it," he said.
Vice President Joe Biden, who was instrumental in pushing through the Senate measure, met with Democrats in a closed-door meeting.
Among those who voted against the bill in the Senate were: Democratic Sens. Michael Bennet of Colorado, Tom Carper of Delaware and Tom Harkin of Iowa, and Republican Sens. Richard Shelby of Alabama, Marco Rubio of Florida, Charles Grassley of Iowa, Rand Paul of Kentucky and Mike Lee of Utah.
The conservative Club for Growth urged a "no" vote on the Senate measure, saying it would be on its "congressional scorecard" used to challenge members of Congress.
Liberal groups also have urged Democrats to reject the deal.
Richard Trumka, head of the AFL-CIO labor union, wrote on Twitter that the deal does not raise taxes enough on the wealthy and "sets the stage for more hostage taking" by Republicans in future budget confrontations.
Republican Representative Tom Cole said his House colleagues should pass the Senate bill rather than try to change it.
"We ought to take this deal right now, and we'll live to fight another day," Cole said on MSNBC. "Putting to bed this thing before the markets (open on Wednesday) is really a pretty important thing to do."