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| House Speaker Rep. John Boehner, R-Ohio, speaks to the media about the fiscal cliff at the U.S. Capitol in Washington, on Thursday, Dec. 20, 2012. |
WASHINGTON (AP) -- House Republicans pushed uncertainly toward a Thursday night vote on legislation to prevent year-end tax increases for most Americans while letting rates rise for million-dollar earners, a politically charged measure meant to position the party for final compromise talks with President Barack Obama on averting an economy-threatening fiscal cliff.
The White House threatened a veto, and
Senate Democrats made plain they would sidetrack the bill if it managed
to win approval over strong objections from anti-tax Republican rebels
in the House.
Yet officials in both parties
suggested the vote would clear the way for a final stab at the broader
negotiations to prevent looming separate tax and spending changes that
could push the nation into a new recession.
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 period in which dozens of tea party-backed
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.
House
Speaker John Boehner, R-Ohio, said Thursday night's legislation - he'd
dubbed it Plan B - marked a move to "protect as many American families
and small businesses as possible from the tax hikes that are already
scheduled to occur" with the new year.
Referring
to one of the core themes of Obama's re-election campaign, he said the
president has called for legislation to protect 98 percent of the
American people from a tax hike. "Well, today we're going to do better
than that," he said of the measure that raises total taxes by slightly
more than $300 billion over a decade. "Our bill would protect 99.81
percent of the American people from an increase in taxes."
Democrats
said that by keeping tax rates unchanged below $1 million - Obama wants
the level to be $400,000 - Republicans had turned the bill into a tax
break for the wealthy. They also accused Republicans of crafting their
measure to impose a tax increase on 11 million middle class families.
"This
is a ploy, not a plan," said Rep. Sandy Levin, D-Mich. He accused
Republicans of being "deeply cynical," saying the legislation would
scale back some education and child tax credits.
A
companion bill on the evening's House agenda, meant to build GOP
support for the tax bill, called for elimination of an estimated $97
billion in cuts to the Pentagon and certain domestic programs over a
decade. It cleared the House on a partisan vote of 215-209 and is an
updated version of legislation that passed a little more than six months
ago.
Those cuts would be replaced with
savings totaling $314 billion, achieved through increases in the amount
federal employees contribute toward their pensions and through cuts in
social programs such as food stamps and the health care law that Obama
signed earlier in his term.
Ironically, the
votes were set in motion earlier in the week, after Boehner and Obama
had significantly narrowed their differences on a compromise to avoid
the fiscal cliff.
Republican officials said
that members of the GOP leadership had balked at the terms that were
emerging. Democrats said Boehner's abrupt decision to shift to his Plan B
- legislation drafted unilaterally by Republicans - reflected a
calculation that he lacked support from his own rank and file to win the
votes needed for the type of agreement he was negotiating with the
president.
Asked at a news conference a few
hours before the scheduled vote if that were so, Boehner avoided a
direct answer. "Listen, the president knows that I've been able to keep
my word on every agreement we've ever made," he said.
At
the same time, Boehner hinted broadly that however Democrats end up
responding to 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.
"Our country faces serious challenges.
The president and I in our respective roles have a responsibility to
work together to get them resolved. I expect that we'll continue to work
together."
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 after the votes in the House.
The tax
bill would prevent scheduled increases from taking effect on Jan. 1 on
all income under $1 million. Above that, the current rate of 35 percent
would rise to 39.6 percent, the level in effect more than a decade ago
when then-President George W. Bush signed tax cuts into law that now are
expiring.
The top rates also would rise on capital gains and dividends from 15 percent to 20 percent.
By
any measure, the two bills in the House were far removed from the
latest offers that officials said Obama and Boehner had tendered.
Obama
is now seeking $1.2 trillion in higher tax revenue, down from the $1.6
trillion he initially sought. He also has softened his demand for higher
tax rates on household incomes so they would apply to incomes over
$400,000 instead of the $250,000 he cited during his successful campaign
for a new term.
He also has offered more than
$800 billion in spending cuts over a decade, half of it from Medicare
and Medicaid, $200 billion from farm and other benefit programs, $100
billion from defense and $100 billion from a broad swath of government
accounts ranging from parks to transportation to education.
In
a key concession to Republicans, the president also has agreed to slow
the rise in cost-of-living increases in Social Security and other
benefit programs, at a savings estimated at about $130 billion over a
decade.
By contrast, Boehner's most recent
offer allowed for about $940 billion in higher taxes over a decade, with
higher rates for annual incomes over $1 million.
His
latest offer seeks about $1.2 trillion in spending cuts, not counting
the change in the cost-of-living adjustment that Obama has said he can
accept. He is seeking $600 billion in savings from Medicare and
Medicaid, $200 billion from other benefit programs and $300 billion from
a range of government accounts.
