(Bloomberg) -- House Republicans plan a vote late Thursday on a measure that would have been hard to imagine before the November 6 election -- a tax increase for top earners, which they previously labeled as job-killing class warfare.
Efforts are deteriorating to avert more than $600 billion in tax increases and spending cuts set to start in January. Even as Republicans seek to bridge their internal divide over taxes by pairing spending reductions with House Speaker John Boehner’s plan, the White House has declared his proposal dead on arrival and warned business leaders yesterday that talks between President Barack Obama and Boehner are regressing.
House Republicans will have the votes to pass Boehner’s plan, Majority Leader Eric Cantor, a Virginia Republican, told reporters Thursday in Washington.
“Absent a balanced offer from the president, this is our nation’s best option,” Cantor said. He said the chamber will stay in session after the vote.
The president and the speaker haven’t talked since trading public statements on Wednesday, according to administration officials and congressional aides, who requested anonymity to discuss the negotiations.
“Speaker Boehner’s plans are non-starters in the Senate,” Senate Majority Leader Harry Reid, a Nevada Democrat, told reporters on Thursday. “House Republicans know that the bill has no future.”
‘Waste a Week’
“They still decided to waste a week while middle-class families got closer and closer to the fiscal cliff,” added Reid. He said the Senate plans to return to work on December 27.
Boehner is rallying Republicans around his plan to raise taxes on income exceeding $1 million as the party’s best option to strengthen his negotiating position and prevent tax increases for everyone else next month.
Republican leaders gave themselves most of the day to line up votes for Boehner’s tax measure by scheduling the roll call on final passage after 7:30 p.m. Washington time, according to the House Republican whip’s notice.
Just seven weeks ago, Republicans opposed tax increases of any kind, especially the higher tax rates on income, capital gains and dividends that are in Boehner’s plan.
“It’s a different environment now,” Sen. Rob Portman, an Ohio Republican, said in an interview. “The reality has shifted, and the question is what’s the best we can do for the economy and for people who are having a tough time making ends meet.”
Plan B
Boehner’s support for his so-called Plan B proposal reflects the leverage that Obama gained in his re-election and a potential dilution of the Republican anti-tax brand. Organizations aligned with the party are split on the issue.
Anti-tax groups including the Club for Growth and the Heritage Foundation oppose Boehner’s plan. Americans for Tax Reform, led by Grover Norquist, issued a statement saying that the plan didn’t violate Norquist’s anti-tax pledge without calling Plan B a good idea.
Republican leaders are pairing the vote on Boehner’s plan with one on spending cuts in a bid for support from lawmakers wary of increasing tax rates without reducing federal programs. The spending measure resembles a bill passed in May along party lines that would cut food stamps, federal workers’ benefits and other domestic initiatives to replace $55 billion in automatic defense reductions set to take effect next month.
Counteroffers
Until this week, Boehner and Obama were trading counteroffers and edging closer to a deal. A split-the-difference plan between their latest proposals would have yielded about $1 trillion each in tax increases and spending cuts.
On December 17, Obama gave Boehner his latest offer, which reduced his revenue demand to $1.2 trillion from $1.4 trillion, made a concession on Social Security spending and spared households with between $250,000 and $400,000 in annual income from tax rate increases.
Boehner rejected it because Obama’s spending cuts weren’t big enough. He then started drafting his Plan B, which the White House says Obama would veto. Now, the path to a deal by the end of the year appears unclear, making a resolution less likely.
Even beyond the divide on taxes, neither a Senate-passed bill nor the House bill addresses several parts of the so-called fiscal cliff, including expiring unemployment benefits and a scheduled payment cut for doctors under Medicare.
‘Take the Deal’
At the White House yesterday, Obama urged Boehner to return to negotiations and said House Republicans should “take the deal,” even as he acknowledged the intra-party political challenges for Republicans.
“I would like to think that members of that caucus would say to themselves: You know what, we disagree with the president on a whole bunch of things,” Obama said. “We wish the other guy had won. We’re going to fight him on a whole range of issues over the next four years. We think his philosophy is all screwed up. But right now, what the country needs is for us to compromise.”
Administration officials told leaders of business and financial services groups yesterday that negotiations with Boehner had deteriorated over the past day, a person familiar with the meeting said.
-- With assistance from Kathleen Hunter, Heidi Przybyla, Hans Nichols, Roger Runningen and Roxana Tiron in Washington. Editors: Jodi Schneider, Laurie Asseo
