Republican Unity Frays Amid Fiscal Cliff Tension

Republican Unity Frays Amid Tension
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Speaker of the House John Boehner, R-Ohio, center, speaks to reporters after the House Republicans voted for their leadership for the next session of Congress, at the Capitol in Washington, Wednesday, Nov. 14, 2012. House Republicans elevated Rep. Cathy McMorris Rodgers, R-Wash., left, to lead the Republican Conference, with House Majority Whip Kevin McCarthy, R-Calif., right, returning in his role. House Majority Leader Eric Cantor, R-Va., and Boehner were both reelected to their leadership posts. (AP Photo/J. Scott Applewhite)

* Conservative Republicans say Boehner offering "tax hike"

* House Speaker leads purge of party dissidents from key committee

* Top Senate Republican stops short of endorsing Boehner plan

By David Lawder and Thomas Ferraro

WASHINGTON, Dec 4 (Reuters) - U.S. congressional Republicans had wanted to show a united front against President Barack Obama's demand for tax hikes, but their tenuous coalition showed signs of strain on Tuesday.

Just a day after House Speaker John Boehner unveiled a "fiscal cliff" counteroffer with some concessions on revenues, he faced a criticism from some conservatives and what appeared to be a wait-and-see approach from others.

As lawmakers voiced their opinions, Boehner presided over a purge of some Republicans regarded as party dissidents from plum House committee assignments. One of those ousted called the moves "petty" and "vindictive."

The infighting threatened to undermine Republicans' negotiating position as Congress and the White House try to avoid $600 billion worth of automatic tax hikes and spending cuts in the new year by reaching a landmark deal to shrink deficits.

The top U.S. Senate Republican offered only tepid support, stopping well short of endorsing Boehner's offer to increase revenues by $800 billion by eliminating tax deductions and credits.

"I think it is important that the House Republican leadership has tried to move the process forward," Senate Republican leader Mitch McConnell told reporters.

Many Republicans, especially the most conservative, see the offer as the very tax hike they pledged to avoid, even though it would not increase rates.

Obama stood firm on his demand that tax rates on the wealthiest must rise as part of a deal to avert the fiscal cliff.

CONSERVATIVES HOWL

Senator Jim DeMint, of South Carolina, a favorite of the anti-tax Tea Party movement, said the plan would "destroy jobs" and let Washington continue to grow U.S. deficits.

DeMint's comments, along with criticism from other conservative lawmakers, showed Boehner faces pressure to stand firm against raising taxes while some in his ranks believe he needs to do so to obtain the elusive common ground with Obama's Democrats.

"This isn't rocket science. Everyone knows that when you take money out of the economy (with tax hikes), it destroys jobs, and everyone knows that when you give politicians more money, they spend it," DeMint said.

"This is why Republicans must oppose tax increases and insist on real spending reductions that shrink the size of government and allow Americans to keep more of their hard-earned money," the South Carolina Republican said.

Republican Representative Tom Cole of Oklahoma - who last week suggested Republicans cave to Obama's demands to renew tax cuts for income of up to $250,000 while allowing those on higher income to expire next month - voiced support for Boehner.

"There is a difference between suggesting a play to the quarterback and tackling him when he runs something else," Cole said.

"I recognize that the speaker makes the final call and he has my complete support," Cole said, predicting Boehner will reach a bipartisan deal that's backed by most House Republicans.

"I sense cautious optimism," Cole said.

As for DeMint's comments, Cole said, "I have a lot of respect for Jim DeMint. But criticism has to be coupled with something that is political possible to be useful," Cole said.

The internal Republican disputes are a sign of frustration that Obama and his Democrats appear to have the upper hand, said Greg Valliere of the Potomac Research Group, which tracks Washington politics for institutional investors. All Obama needs to do is wait and taxes will rise, although that risks damaging the economy.

"Republicans realize they will get much of the blame if we go over the cliff. And as they game out the ultimate outcome - which inevitably will include major compromises - they are acting more frustrated in public," Valliere said.

COMMITTEE PURGE

Two of the most conservative House members also lashed out at Boehner's leadership after he led an effort to remove them from plum assignments on the House Budget Committee.

Representatives Tim Huelskamp of Kansas and Justin Amash of Michigan - both Tea Party favorites - said they were purged from the panel because they defied leadership too often to defend their conservative principles. Two other Republicans also lost assignments on other committees.

Both Amash and Huelskamp voted against last year's deal to raise the debt limit and cast the only Republican votes in the House Budget Committee against the budget plan this year authored by panel chairman Paul Ryan.

Huelskamp called his ouster "petty" and "vindictive."

"What this says is that dissent will not be tolerated, particularly conservative dissent," he told an audience at the conservative Heritage Foundation think tank.

He added that Boehner wanted to silence opposition to a deal that would raise taxes.

"I think this makes it very clear to conservatives that you're about to get run over. Sit down and just lump it," he said.

A senior House Republican aide said Boehner was not upset by pot shots from some within the party's ranks.

"DeMint is a member of the far right," the senior aide said. "You would prefer that he bite his lip and not offer his criticism. But I don't think it is going to have any impact on the dynamics."

Boehner anticipates that dozens in his party will vote against any deal, but still believes he can win a majority -- perhaps two-thirds -- of House Republicans, the aide said.

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Before You Go

What Could Fall Off The Fiscal Cliff
Military Health Care - $16 Billion(01 of14)
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In his last offer to House Speaker John Boehner (R-Ohio), President Barack Obama lobbied for $16 billion in cuts from the military's health care program, TRICARE. In 2012, the president also proposed hiking fees for military personnel and veterans who receive benefits under the program in an effort to help cut the defense budget. His proposal drew significant fire from Republican lawmakers and veterans' groups. (credit:(Mark Wilson/Getty Images))
Military Retirement Program - $11 Billion(02 of14)
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Both sides agreed to cuts from the military retirement program. Rep. Eric Cantor (R-Va.) claimed during July 2011 talks that lawmakers had reached a tentative deal to slash $11 billion. Under the current system, military personnel receive immediate retirement benefits after serving for 20 years. According to a recent report from the Congressional Budget Office, the appropriation cost per active military service member has increased at a higher rate than either inflation or the total pay package of private-sector employees. Given the budget constraints looming before the Defense Department, the CBO floated the idea of transitioning the military retirement program to a matching-payment model. (credit:(AP Photo/Matt York))
Federal Employee Retirement Program - $33 -$36 Billion(03 of14)
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Cantor claimed that Republicans and Democrats had agreed to $36 billion in savings over 10 years from civilian retirement programs. The president proposed a marginally more modest figure of $33 billion in his final offer to House Speaker John Boehner. Just this year, Republicans in the House Committee on Oversight and Government Reform also looked to find savings from the Federal Employee Retirement System by requiring employees to pay more of their salary into their pensions, which Democrats opposed as a pay cut that would make civil service less attractive for top talent. In September 2011, the federal government employed over two million individuals, either through the cabinets or independent agencies. Many Republicans have complained that the federal workforce has ballooned during the Obama administration, and while the raw number of employees has risen by 14.4 percent between Sept. 2007 and Sept. 2011, the percentage of public employees out of the total civilian workforce has remained fairly constant around 1.2 percent since 2001. Much of the raw growth has been concentrated in the Department of Defense, Veteran's Affairs and Homeland Security. (credit:(AP Photo/Carolyn Kaster))
Agricultural Subsidies - $30 - $33 Billion(04 of14)
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Democrats and Republicans agreed to cut as much as $30 billion from agricultural subsidies; the main opposition fell along geographical lines rather than partisan ones. Hailing from an agriculture-heavy state, Sen. Max Baucus (D-Mont.) threatened to pull out of talks entirely if a deal included that much in subsidy reduction. The president ended up pushing for $33 billion in cuts, but that figure also included reductions in conservation programs. Baucus now tells HuffPost any cuts should be made through the farm bill, not fiscal cliff talks. (credit:(AP Photo/Danny Johnston, file))
Food Stamps - $2 to $20 Billion(05 of14)
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Cantor pushed hard for significant cuts to food stamps, formally known as the Supplemental Nutrition Assistance Program. He charged that the federal government could save as much as $20 billion over ten years by eliminating waste and fraud, but the White House countered that the real number was closer to $2 billion. Instead, those cuts would force the program to scale back on the number of enrollees and the level of benefits it could offer. (credit:(AP Photo/Matt Rourke))
Flood Assistance - $4 Billion(06 of14)
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Obama proposed cutting $4 billion from flood assistance funding in his final offer to Boehner in July 2011. But Hurricane Sandy straining the National Flood Insurance Program; The New York Times reports that thousands of claims are being submitted daily, which could send the overall cost upwards of $7 billion for a program that suffers from a ballooning debt problem. And with climate change promising future flooding disasters along the eastern seaboard, cutting the program looks unwise. (credit: (AP Photo/ John Minchillo))
Home Health Care - $50 Billion(07 of14)
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The president offered to cut $110 billion over the next decade from the government's health care spending, excluding Medicare. Among the programs that could lose crucial funding is home health care, where Democrats and Republicans agreed to $50 billion in reductions over ten years. Cantor pushed for closer to $300 billion in spending cuts to health care, but Democrats appeared to stand firm. (credit:(AP Photo/Tony Dejak))
Higher Education - $10 Billion(08 of14)
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The president proposed cutting $10 billion from higher education over the next decade, mostly from Pell grants. Over nine million students relied on federal subsidized loans to afford college during the 2010-2011 school year, and the skyrocketing costs have continued to diminish the purchasing power of the Pell grant program. Obama has actively worked to make college more affordable for lower-income students. Key Republican lawmakers have attempted to cut funding for student loans; most notably, Rep. Paul Ryan (R-Wis.) slashed the maximum award from $5,550 per student per year down to just $3,040. (credit:(AP Photo/Jae C. Hong))
Medicaid And Other Health- $110 Billion(09 of14)
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The original funding levels proposed by Cantor and the GOP leadership would turn the entitlement program for America's poor into little more than a block grant program, Democrats claimed during the 2011 debt ceiling talks. Under such a program, they argued that states would then drop more people from enrollment and scale back on health benefits. In fiscal year 2009, over 62 million Americans -- many of them children -- depended on Medicaid for their health care. But the president did agree to $110 billion in cuts from Medicaid and other health programs. (credit:(AP Photo/Rick Bowmer))
Medicare - $250 Billion +(10 of14)
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Republicans pushed for a drastic overhaul to the entitlement program for America's seniors. Ryan infamously proposed turning Medicare into little more than a voucher system in which seniors would receive checks to purchase their own health care on the open market -- a plan that would ultimately force individuals to shoulder more of the burden for their health care costs. Democrats refused to accept changes similar to those in Ryan's plan. The president, however, was more open to other GOP suggestions on Medicare. In his final offer to Boehner, he agreed cut $250 billion over the next ten years -- in part by increasing premiums for higher-income seniors and by raising the eligibility age from 65 to 67 (although over a longer time frame). (credit:(AP Photo/Bill Haber, File))
Tax Reform - $800 Billion - $1.6 Trillion(11 of14)
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Republicans have again and again decried any attempt to raise taxes, either on the highest earners or on corporations. (A Democracy Corps/Campaign for America's Future survey shows that 70 percent of voters support raising taxes on the wealthiest two percent of Americans.) Instead, Boehner has pushed for a comprehensive tax reform bill that would lower the marginal tax rates while closing loopholes and eliminating deductions in order to raise around $800 billion in additional revenues. For many Democrats, that figure simply isn't enough. White House Press Secretary Jay Carney announced Tuesday that the president was aiming for as much as $1.6 trillion in new revenues, and the president told reporters on Wednesday that it would be practically impossible to raise the amount of revenue he wanted simply from closing loopholes and lowering rates. (credit:(AP Photo/Charles Dharapak))
Social Security - $112 Billion(12 of14)
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Social Security isn't driving the deficit, yet Republicans have pursued drastic changes to the program. Sen. Harry Reid (D-Nev.) has promised that Social Security would be off the table in the on-going negotiations to avoid the fiscal cliff, but Obama did concede to tying the benefits to a recalculated Consumer Price Index that would ultimately provide less money to retirees. Sen. Bernie Sanders claims that, under such a measure, seniors who are currently 65 years-old would see their benefits drop by $560 a month in 10 years and by as much as $1,000 in 20 years. The Moment of Truth project (led by the two former co-chairs of the president's deficit reduction commission, former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles) claims that the recalculated CPI could save as much as $112 billion from Social Security over the next ten years. (credit:(AP Photo, File))
Tax Loopholes And Deductions - Up To $180 Billion(13 of14)
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Although Cantor and other GOP House members demanded that any deficit-reduction deal brokered in 2011 be classified as revenue-neutral, they were open to closing particular loopholes in the corporate tax code and limiting itemized deductions for individuals -- given that they were offset by other tax cuts. Out of the $50 billion in savings to be found over the next decade from closing loopholes, Cantor proposed getting $3 billion from eliminating the break for corporate-jet owners and another $20 billion from voiding the subsidies for the oil and gas industries.On the individual earner side, he proposed eliminating the second-home mortgage deduction for $20 billion, as well as limiting the mortgage deduction for higher-income households to rake in another $20 billion. He also offered to tighten the tax treatment of retirement accounts. But Democrats wanted to see even greater action taken on itemized deductions. In June 2011, Rep. Chris Van Hollen (D-Md.) proposed raising $130 billion in new revenues by capping itemized deductions at 35 percent for the highest income brackets. The GOP response to his proposal at the time was a resounding "no." (credit:(Fabrice Coffrini/AFP/GettyImages))
Bush Tax Cuts For The Wealthy - $950 Billion(14 of14)
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Set to expire on Dec. 31, 2012, the Bush tax cuts represent one of the most controversial elements of the so-called fiscal cliff. They added over $1.8 trillion to the deficit between 2002 and 2009. Yet Republicans argue that an extension is necessary to create jobs and spur economic growth. But a study from the Congressional Research Service found that tax cuts for the wealthiest earners had little economic effect. The White House is pushing for a renewal only of those tax breaks for the lower- and middle-class Americans in order to save the average middle-class family between $2,000 and $3,500 next year. Letting the cuts expire for those earning over $250,000 a year -- or the wealthiest two percent of Americans -- would haul in $950 billion in savings over the next decade, according to the CBO. Obama stressed how much the country stood to gain from such an approach Wednesday during a press conference. "If we right away say 98 percent of Americans are not going to see their taxes go up — 97 percent of small businesses are not going to see their taxes go up," he said. "If we get that in place, we're actually removing half of the fiscal cliff." (credit:(AP Photo/Ron Edmonds))