House Looks to Upend Fiscal Cliff Deal

by John M. Curtis
(310) 204-8700

Copyright Jan. 1, 2012
All Rights Reserved.                                         

           Waving off skeptics and battling his Party’s right wing, Senate Minority Leader Mitch McConnell (R-Kt.) joined hands with Vice President Joe Biden to do what’s right for the country in resolving the “fiscal cliff.”  As the Dec. 31 deadline approached, President Barack Obama turned to his genial VP to get beyond partisan differences and cut a deal with Republicans.  After hours of 11th-hour negotiations, the two sides announced a deal to avoid the “fiscal cliff,” giving the president very little of what he originally wanted:  Boosting tax rates on individuals earning $200,00 and couples $250,000.  Biden and McConnell compromised at $400,000 individuals and $450.000 for couples. Six-hundred billion in defense and domestic spending cuts were postponed for two months.  All in all, Biden and McConnell struck a deal to prevent the economy from going over the falls.

             Now that the Senate compromised, it’s up to House Speaker John Boehner (R-Ohio) to corral his rebellious Tea Party friends led by House Minority Whip Eric Cantor (R-Va.) and Budget Committee Chairman Paul Ryan (R-Wis.), whose opposition to tax hikes take on an epic battle.  “This keeps us out of recession for now,” said Menzie Chinn, an economist at the University of Wisconsin, Madison.  At midnight Jan. 2, 2013, Bush’s 2001-03 tax cuts expire, shrinking the paychecks of most W-2 wage-earners by 5%-10%.  Most economists expect the loss of personal income to plunge the nation into a double-dip recession.  Judging by Wall Street’s 163-point rally Dec.31, Wall Street has jumped the gun, believing the fiscal cliff was a done deal.  Boehner, who tried to get rebellious House Republicans onboard Dec. 21, faces the same anti-tax resistance as before.

             With the Senate agreeing to a reasonable “fiscal cliff” deal, the House has the pressure to vote on the measure Wednesday, Jan. 2.  If not onboard with the Senate plan, House Republicans could cost average American taxpayers $3,500 a year.  Failing to act because of a band of Tea Party zealots, the anti-Tax lobby could cost taxpayers the biggest increase since former President George W. Bush took office Jan. 20, 2001.  Without the House GOP signing on to the Senate deal, jobless benefits would be terminated to the long-term unemployed and Medicare payments slashed to doctors.  Without a fiscal cliff deal, Deutsche Bank economists expect the nation’s Gross Domestic Product to shrink in 2013 from its current 3.1% to 1.9%, dangerously close to a new recession.  Unlike the Senate where pragmatics rules over ideology, the House continues its anti-tax fervor.

             Boehner’s job is to force an up-or-down vote Jan. 2 on the Senate bill, allowing taxes to go up on individual incomes above $400,000.  Flatly rejecting the Senate plan, House Majority Whip Eric Cantor signaled the he would oppose the bill because it didn’t specify enough spending cuts.  Senate negotiators specifically put off decisions about ultimate defense and domestic spending cuts for two months.  Cantor and GOP House hardliners know that the Senate bill isn’t subject to modification.  While Cantor mirrors the House Tea Party caucus, there’s still enough Democrat and moderate Republican votes to get through the House.  “The Speaker and the Leader laid out options to members and listened to feedback,” said Boehner spokesperson Brendan Buck, unwilling to join the pessimism.  House GOP members face the same dilemma of accepting compromise or wrecking the economy.

             Former House Speaker Nancy Pelosi (D-Calif.) asked Boehner to call for a straight up-or-down vote.  Anti-tax types like Cantor won’t vote for any measure that includes tax hikes.  But other House members will surely support an imperfect but necessary plan to stave off the “fiscal cliff.”  “Our Speaker has said when the Senate acts, we will have to vote in the House.  That is what he said, that is what we expect, that is what the American people deserve—a straight up-or-down vote,” said Pelosi.  Tea Party folks like Cantor and House Budget Chairman Paul Ryan (R-Wis.) resent the Senate bypassing the House, despite the House’s inability to act.  Despite Tea Party opposition, when Boehner calls for the up-or-down vote Jan. 2, there are enough votes for the measure to pass.  Boehner must demonstrate that he has enough control in the House to call for the vote.

             Whatever clout Obama has on Capitol Hill, he threw his weight behind the Senate compromise.  “This is the right thing to do for our country and the House should pass it without delay,” Barack said in a written statement.  House Republicans have made their point about opposing tax increases.  Leaders like Cantor and Ryan are tone deaf to mainstream politics, not caring any longer about national elections.  Taking a drubbing in the polls Nov. 6 hasn’t deterred the Tea Party from pushing their national agenda of slashing the size of federal government.  Targeting entitlement programs, House anti-Tax zealots like Ryan and Cantor aren’t interested in compromise.  They’ve found out that they wring more concessions from the mainstream by taking extreme positions, especially about taxes.  Faced with an up-or-down vote tomorrow, expect the Tea Party to remain true to form but lose the vote.

 John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.