‘Fiscal cliff’ plan clears House with GOP divided

WASHINGTON — The House voted Tuesday to roll back income tax increases on the vast majority of Americans, finalizing a deal on the so-called fiscal cliff after weeks of gridlock.

The approval, in a session that stretched late into the New Year’s holiday, came after hours of closed-door debate among Republicans, with conservatives threatening to derail a bill that had overwhelmingly passed the Senate in the early hours of the morning.

The final tally, 257 to 167, included support from 172 of the chamber’s Democrats and just 85 of the majority Republicans, far fewer than half. The vote divided House GOP leaders, with the second- and third-ranking Republicans, Eric Cantor of Virginia and Kevin McCarthy of Bakersfield, among the 151 in their party voting no. Speaker John A. Boehner (R-Ohio), casting a rare vote, and Rep. Paul D. Ryan (R-Wis.), the House Budget Committee chairman and 2012 vice presidential nominee, voted in favor.

Once signed by President Obama, the bill will allow taxes to rise for those with incomes above $400,000 for individuals and $450,000 for couples. It also will renew tax credits aimed at low-income households and college students, extend unemployment benefits, delay automatic spending cuts in defense and other government programs for two months, and resolve several other issues that Congress had left hanging.

QUIZ: How much do you know about the fiscal cliff?

What it will not do is match the ambitious goals set by Obama and Boehner for a “grand bargain” that would put the government on a path to a balanced budget. Instead, the compromise sets up another deadline two months hence for Congress to once again deal with the government’s budget.

That debate seems likely to be at least as bitter as this one. In the closing minutes of the House session, Democrats disputed Republican claims that the deal set a new permanent level of tax revenue for the federal government. Democratic lawmakers noted the president had vowed to seek more new tax revenue in the next round. Republicans countered that overspending, not under-taxation, was the cause of the government’s problems.

Shortly after the vote, Obama hailed the passage as part of the balanced approach to deficit reduction he had sought, noting that it fulfilled his campaign pledge to raise taxes on the nation’s wealthiest citizens. Obama, who will sign the measure in coming days, took pains to praise leaders of both parties who corralled votes.

Speaking at the White House before leaving to rejoin his family on vacation in Hawaii, Obama called the compromise “just one step in the broader effort” to reduce the deficit, and specifically pointed to spending on Medicare for an aging population as the major force driving the red ink.

“I am very open to compromise,” he said. But, he added, “we can’t simply cut our way to prosperity.” Solving the problem will require “further reforms to our tax code” to eliminate unjustified loopholes, he said.

PHOTOS: Scenes from the fiscal cliff

Boehner, in a statement, said he would press for “significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”

The deal, largely negotiated by Vice President Joe Biden and Senate Republican leader Mitch McConnell (R-Ky.), blocked income tax increases that were to go into effect at the turn of the year for 99% of American households. It passed the Senate by a lopsided 89-8 vote, engineered by McConnell and Senate Majority Leader Harry Reid (D-Nev.) to put as much pressure as possible on the House to follow suit.

But as House Republicans gathered early on the afternoon of New Year’s Day for the first of two private caucus meetings, many vowed to resist. The bill could be amended and sent back to the Senate, they said.

The mood did not last.

In the evening, Republicans held a second caucus meeting. This time, take-out Chinese food replaced sandwiches, and resignation subbed for defiance.

Several Republicans said afterward they feared that, if the bill failed and taxes went up on nearly everyone in the country, their party would take the blame.

“You do have to know when to hold ‘em and when to fold ‘em,” said Rep. Steven C. LaTourette (R-Ohio), who is retiring this week, as he emerged from the meeting. “We’ve been beaten [in] this fight.”

Even so, the decision by Boehner to bring the bill to a vote without the support of a majority of his caucus — the usual standard — rankled many Republicans. The compromise, they complained, did virtually nothing to cut spending. And while it kept the low tax rates of the President George W. Bush era for most Americans, the tax hikes it did contain were anathema to lawmakers who had sworn to oppose any increase. Passage of the bill in the Senate marked the first time in two decades that any Republican in Congress had voted for an income tax increase.

Concern over the next debate fueled much of the Republican opposition to the current bill. Some Republicans balked at the economic stimulus provisions — primarily the low-income tax breaks, which were a priority for Obama and House Democrats. They also objected that the bill would raise far more in tax revenue than it would trim in federal spending, which they worried set a bad precedent for future budget negotiations with the president.

Those concerns dominated the day’s first caucus meeting, in which Cantor told members he could not support the bill. Others pushed for a vote on an amendment to add spending cuts.

For a time, Republican lawmakers said they were fired up to fight the Senate deal — many wistfully recalling Boehner’s Plan B, which would have taxed incomes only above $1 million, about the top two-tenths of 1% of Americans. That bill never came to a vote because the speaker was forced to yank it from the floor amid GOP resistance.

As discussions continued into the evening, however, Republicans began to accept that they had little choice. Senate leaders had made clear they would not consider changes to the bill — and a head count of GOP members indicated that even if an amendment were added to cut spending, a majority of the House would still oppose it.

Lawmakers also warily eyed the clock ticking toward morning, when the financial markets would begin reacting if the picture in Washington remained unsettled. Economists have warned for months that the combination of across-the-board tax increases and spending cuts would raise unemployment and potentially bring on a new recession.

Rep. Jack Kingston (R-Ga.), a veteran member, said, “I think we’re at the time where people are tired.”

“People are ready to vote,” he said. “The Senate sat on their duffs all year, and they had a great 48-hour push, but for the House this really has been a long, one-year process. We’ve gone as far as we can go, and I think people are ready to bring it to conclusion.”

Democrats looked on in bemusement at the disarray across the aisle, muting their own disagreements. Biden held a closed-door session with Democrats. He called on them to support the Senate bill despite concerns expressed by liberals, inside Congress and out, that it set too high a threshold for tax increases.

House Minority Leader Nancy Pelosi (D-San Francisco) categorized the compromise measure as “gigantic progress.”

Influential conservative groups sent mixed signals to Republicans. Grover Norquist, author of the pledge against tax increases that most GOP members of Congress have signed, said a “yes” vote would not violate that promise, while the Heritage Foundation and tea party groups that have substantial influence over GOP conservatives called for the party to oppose it.

Former House Speaker Newt Gingrich took the opportunity to chide his onetime colleagues. “The GOP has been engaged in a two-month dance of defeat and surrender!” he said in a Twitter message. “I hope tonight is the end of this self-defeating strategy.”

Keep track of further updates on Twitter and Facebook

lisa.mascaro@latimes.com

kathleen.hennessey@latimes.com

Staff writer Michael A. Memoli contributed to this report.