House Republicans' 'fiscal cliff' gripe: When will we ever get spending cuts?

UPDATE: At 11 p.m., the House voted to pass the Senate's "fiscal cliff" bill, 257 to 167, with 151 Republicans and 16 Democrats opposing the bill.

The Senate “fiscal cliff” bill, which blocks the largest tax hike in US history and passed on a stunning 89-to-8 vote early Tuesday morning, now faces an uncertain path in the House, as GOP leaders weigh prospects for adding spending cuts to the bill.

In a surprise move, House majority leader Eric Cantor (R) of Virginia announced on Tuesday that he does not back the bill. Speaker John Boehner (R) of Ohio, who faces reelection as speaker on Jan. 3, has committed to putting a bill on the floor, but has yet to signal his support.

Many House Republicans are troubled by the lack of spending cuts in the deal. Back in the summer of 2011, conservatives fought tooth-and-nail against raising the debt limit and grudgingly agreed only because $1.2 trillion in spending cuts over 10 years – called the "sequester" – were promised to begin no later than Jan. 1, 2013.

Now with that day come – and almost gone – these lawmakers are caught between a desire to hold Congress accountable and a fear that failure to reach a fiscal cliff deal could set off a sharp response on Wall Street Wednesday. The stark fact is that, at this moment, the Senate deal is the only thing preventing the US from plunging fully over the fiscal cliff – the $600 billion in tax hikes and automatic spending cuts that many economists say might throw the country into a fresh recession.

One path House Republicans are considering is adding spending cuts to the deal in the form of amendments. But amendments at this point are perilous for the bill. Any change voted by the House must be approved by the Senate or worked out in a conference committee and passed by both bodies. Senate majority leader Harry Reid (D) of Nevada on Monday told senators not to expect any further votes in the current session of Congress, which expires at noon Thursday.

If nothing is worked out by Thursday, the new Congress must start from scratch.

The Senate bill:

• Blocks tax hikes on individuals with income under $400,000 and families with income of less than $450,000.
• Extends individual and business tax credits.
• Maintains unemployment insurance at 99 weeks.
• Permanently extends the Alternative Minimum Tax (AMT) set to hit some 30 million families.
• Blocks cuts in payments to physicians serving Medicare patients.
• Prevents the estate tax from reverting to previous rules, which hit estates valued at $1 million or above. The current exclusion level is $5 million.

What it does not do is make significant spending cuts – a key campaign promise for most House Republicans, especially those in the freshman “tea party” class. It delays the first installment of the sequester – the $110 billion set to kick in this year – for two months.

“I’m not willing to sacrifice the right answer for the politically expedient answer, not yesterday and not today,” says freshman Rep. Rob Woodall (R) of Georgia, who is calling for deeper spending cuts.

On Dec. 21, Speaker Boehner was forced to abandon his own “Plan B” to resolve the fiscal cliff, which proposed extending tax breaks on income below $1 million. At least 50 members of the GOP caucus opposed that move, some say considerably more. “We weren’t within two or three,” quips Rep. Tom Cole (R) of Oklahoma, the deputy whip.

But his approach to the caucus now is on a different basis, say Republicans exiting the closed caucus meetings Tuesday. Boehner is telling Republicans that this is not his plan, it is the Senate’s bill, and it’s up to House Republicans to work together to find the best way forward.

“The question is: Do we fight it now or do we wait for the debt limit?” says Rep. Spencer Bachus (R) of Alabama, noting that the debt limit must be raised again early in 2013. “I think we need at least to make a statement [on spending cuts], but we need 218 votes and are concerned about the [stock] market.”

Democrats, too, are worried about aspects of the Senate bill, especially extending tax breaks for income up to $450,000 and sheltering estates worth $5 million from the estate tax. On tax breaks, most Democrats favored a cutoff at $250,000. On Tuesday, Vice President Joe Biden met behind closed doors with House Democrats to beef up support.

“We gave up a lot,” says Rep. John Conyers (D) of Michigan. “But the president, Reid, and [Democratic leader Nancy] Pelosi did their best, and I have to take them at their word.”

At a press briefing on Tuesday, Representative Pelosi (D) of California called on Boehner to allow an up-or-down vote.

“The United States Senate voted in an uncharacteristically, very strong, bipartisan way – 89 votes in favor of compromise legislation,” she said. “That was historic. That legislation was sent over to the House, up until our speaker has said: 'When the Senate acts, we will have a vote in the House.' That is what he said. That is what we expect.”