Congress approved a plan to end Washington’s long drama over the “fiscal
cliff” late Tuesday after House Republicans surrendered to President Obama’s
demand to let taxes rise on the nation’s richest households.
The House voted 257 to 167 to send the measure to Obama for his signature;
the vote came less than 24 hours after the Senate overwhelmingly approved the
legislation.
House Speaker John A. Boehner (Ohio) and most other top GOP leaders took no
public position on the measure and offered no public comment before the 10:45
p.m. vote. Boehner declined even to deliver his usual closing argument, leaving
House Ways and Means Committee Chairman Dave Camp (R-Mich.) to defend the
measure as the “largest tax cut in American history.”
The bill will indeed shield millions of middle-class taxpayers from tax
increases set to take effect this month. But it also will let rates rise on
wages and investment profits for households pulling in more than $450,000 a
year, marking the first time in more than two decades that a broad tax increase
has been approved with GOP support.
The measure also will keep benefits flowing to 2 million unemployed workers
on the verge of losing their federal checks. And it will delay for two months
automatic cuts to the Pentagon and other agencies that had been set to take
effect Wednesday.
Many economists had warned that the scheduled tax increases and spending cuts
would have plunged the economy back into recession.
Conservatives complained bitterly that the legislation would raise taxes
without making any significant cuts in government spending. For much of the day,
the measure appeared headed for defeat as Boehner contemplated tacking on
billions in spending cuts, a move that would have derailed a compromise that the
White House and Senate leaders had carefully crafted.
In the end, GOP lawmakers decided not to take a gamble that could force the
nation to face historic tax increases for virtually every American — and leave
House Republicans to take the blame.
“I don’t know if playing chicken with the American people at this point is in
the best interest of the people,” said freshman Rep. Lou Barletta (R-Pa.).
The bill drew 85 votes from Republicans and 172 from Democrats, meaning well
more than half of its support came from the Democratic minority.
With 151 Republicans voting “no,” the GOP tally fell far short of a majority
of the GOP caucus. That broke a long-standing preference by Boehner to advance
only bills that could draw the support of a majority of his Republican members.
In a sign of the moment’s gravity, Boehner himself cast a rare vote: He
supported the bill. So did Rep. Paul Ryan (Wis.), the GOP’s vice-presidential
candidate last year, who parted ways from Sen. Marco Rubio (R-Fla.), a potential
2016 presidential contender, who voted against the measure.
But other top GOP leaders voted no, including Majority Leader Eric Cantor
(Va.) and Majority Whip Kevin McCarthy (Calif.).
Boehner was humiliated just two weeks ago when the Republican rank-and-file
refused to support a GOP alternative that would have permitted taxes to rise
only on income over $1 million a year. But when he scheduled a vote on the
Senate bill, even some of the chamber’s staunchest conservatives agreed that
giving up the fight was probably the best course.
In a brief statement, Obama praised congressional leaders for advancing the
legislation, which he said would produce $620 billion in new tax revenue. “But I
think we all recognize this law is just one step in the broader effort to
strengthen our economy and broaden opportunity for everybody,” he said, noting
that the fight over the budget will continue when the new Congress faces the
imposition of sequestration cuts in just two months.
But Obama warned again that he would not negotiate with Republicans over the
$16.4 trillion debt limit, which must be raised in the coming weeks. “While I
will negotiate over many things,” he said, “I will not have another debate with
this Congress over whether they will pay the bills they’ve already racked
up.”
With that, Obama took off for Hawaii, where he left his wife and daughters
the day after Christmas. It was unclear when he planned to sign the fiscal cliff
measure, which calls for the top tax rate to rise immediately from 35 percent to
39.6 percent on income over $450,000 for married couples and $400,000 for single
people.
The measure will protect more than 100 million families earning less than
$250,000 a year from significant income tax increases set to take effect this
month — although their payroll taxes will rise with the expiration of a
temporary tax cut adopted two years ago.
In addition to avoiding much of the fiscal cliff, the measure will extend
federal dairy policies through September, averting a threatened doubling of milk
prices. The measure also will cancel a scheduled pay raise for members of
Congress.
After weeks of partisan bickering over whether taxes should increase for
anyone, the compromise bill rolled through the Senate early Tuesday in a highly
unusual New Year’s Day vote. The vote was 89 to 8, with both parties offering
overwhelming support.
The moment served as a rare bipartisan coda to what has been one of the most
rancorous, partisan Congresses in recent history. The 11 senators who are
retiring received hugs and kisses from their colleagues. The current Congress
ends at noon Thursday, when the new Congress will be seated, and lawmakers would
have been forced to scrap the fiscal-cliff legislation and start over.
Three Democrats voted against the measure, including liberal Tom Harkin
(Iowa), and moderates Thomas R. Carper (Del.) and Michael F. Bennet (Colo.).
Bennet complained that the bill would do little to reduce record budget
deficits. According to the nonpartisan Congressional Budget Office, the measure
would cause the national debt to be $4 trillion higher by 2022 than if all of
the cliff’s tax increases and spending cuts had been allowed to take effect.
Five Senate Republicans also rejected the measure, including tea party
favorites Rand Paul (Ky.) and Mike Lee (Utah).
But 40 others voted for it, including such GOP leaders on tax-and-spending
policy as Sen. Patrick J. Toomey (Pa.) and Ronald H. Johnson (Wis.), a tea party
star who frequently consults with House conservatives.
Neither party was entirely happy with the bill. While conservatives
complained about new taxes and a lack of spending reductions, liberals
complained about its provisions regarding inherited estates.
Although the tax rate will rise from 35 percent to 40 percent, estates worth
as much as $5 million — $10 million for married couples — will go untaxed. And
an inflation adjustment will guarantee that the size of the exemption will grow
to $15 million for couples by the end of the decade.
Still, House Democrats largely embraced the measure, which was negotiated by
Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) and
endorsed by Obama. After receiving a point-by-point 90-minute briefing from
Biden on Tuesday, Democrats rallied around the package.
“It’s long overdue for us to have this solution to go forward and remove all
doubt as to what comes next for our country,” said House Minority Leader Nancy
Pelosi (D-Calif.).
But it was a different story among House Republicans, who at first appeared
to strongly oppose it. In the early afternoon, the GOP gathered for the first of
two lengthy closed-door briefings in the basement of the Capitol.
There, Boehner told members that he wanted to hear their views but would not
take a position. Cantor, meanwhile, “forcefully” aired concerns that the measure
would raise taxes but not cut spending, said Rep. Jeff Flake (R-Ariz.).
Afterward, Cantor emerged and told reporters: “I do not support the bill.”
That view was widespread in the room, where House members vented their
frustrations at the Senate for foisting the arrangement upon them. Many rose to
say they should take advantage of the legislative process, tack on billions in
new spending reductions and force the Senate to respond.
“We should not take a package put together by a bunch of sleep-deprived
octogenarians on New Year’s Eve,” retiring Rep. Steven C. LaTourette (R-Ohio)
said in a dig at Senate leaders. LaTourette, who has championed ambitious
deficit-reduction efforts, faced the prospect of casting his last vote in
Congress for a measure that would sharply deepen deficits.
Rep. Spencer Bachus (R-Ala.) said a consensus was developing that the GOP
should amend the Senate’s plan. “I would be shocked if the bill did not go back
to the Senate,” he said.
The negative reaction threatened to plunge Washington back into the
high-stakes, last-minute drama that has characterized both the fiscal-cliff
negotiations and a series of other recent confrontations between the two parties
over spending and taxes, including the fight over raising the federal borrowing
limit in the summer of 2011.
Senate Democrats and administration officials warned that the Senate would
reject any move to amend the measure. The House would be responsible for a dive
over the cliff hours before U.S. financial markets were set to open Wednesday
after the New Year’s holiday.
For hours, there was no decision on how to proceed. As leaders huddled,
rank-and-file members returned to their offices and were greeted with confusing
messages from conservatives and constituents.
Former House speaker Newt Gingrich (R-Ga.), who has opposed any deal to raise
taxes, voiced support for Cantor. But conservative writer William Kristol, wrote
a blog post titled “Say Yes to the Mess.”
“Politically, Republicans are escaping with a better outcome than they might
have expected, and President Obama has gotten relatively little at his moment of
greatest strength,” Kristol said, advising House Republicans to take the
deal.
Shortly before dinner, Republicans gathered behind closed doors again to
settle on a new plan: Leaders would survey members about the spending-cut
package to determine if it could pass. If not, they would allow the Senate bill
to move ahead.
Around 8 p.m., they announced a decision. The Senate bill would receive a
vote, with the expectation that Democrats and Republicans would join forces to
approve the measure.
During floor debate, Camp, chairman of the tax-writing Ways and Means
Committee, said GOP members should support the bill because it would make
“permanent tax policies Republicans originally crafted” under President George
W. Bush.
Rep. Sander M. Levin (Mich.), the ranking Democrat on the Ways and Means
Committee, countered that Democrats should back the bill because it would let
the Bush tax cuts expire for the wealthy, breaking the “iron barrier” to tax
increases since 1993.
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