By Andrew Taylor
The Associated Press
The No. 2 Republican in the House leadership says he opposes a Senate-passed measure to avert the so-called fiscal cliff.
Virginia Rep. Eric Cantor told reporters after a two-hour closed-door meeting Tuesday with his GOP lawmakers that he did not support the bill.
He said House leaders were looking for “the best path forward” and that no decisions had been made.
The Senate passed the measure early Tuesday by a sweeping 89-8 vote. House passage of the measure would send it to President Barack Obama for his signature. The bill would increase taxes on family income exceeding $450,000 and delay across-the-board spending cuts for two months.
House GOP leaders were considering amending the measure and sending it back to the Senate, but that step could produce a deadlock.
Meanwhile, House Democratic leaders are pressing Speaker John Boehner to let the House vote on the Senate-approved bipartisan compromise that would avert much of the impact of the so-called fiscal cliff.
Following a nearly three-hour private meeting Tuesday between Vice President Joe Biden and House Democratic lawmakers, Minority Leader Nancy Pelosi said Democrats expected Boehner to allow the House to vote on the accord.
Boehner has said the House will vote on the Senate measure or vote to amend it. He and House GOP lawmakers were also meeting Tuesday, and some Republicans expressed concerns that the measure needed more spending cuts.
The Senate passed the measure early Tuesday on an 89-8 vote.
The compromise would allow tax increases on the nation’s highest earners but prevent tax boosts from everyone else.
A last-ditch tax deal in the Senate might let the U.S. economy escape the worst of the so-called fiscal cliff and avoid going back into recession. But even if the House goes along, the tax increases likely coming in 2013 will dent economic growth anyway.
In the early hours of the new year, the Senate voted to end a long stalemate and raise taxes on upper-income households, extend long-term unemployment benefits and postpone decisions over government spending cuts, officials said. But any deal needs approval from the House.
About $536 billion in 2013 tax increases were scheduled to take effect Jan. 1, along with $109 billion in cuts from military and domestic-spending programs, if Democrats and Republicans could not reach agreement.
Mark Vitner, senior economist at Wells Fargo, said he expects budget policy, including the higher taxes in the Senate plan, to shave 0.8 percentage points off economic growth in 2013. The economy doesn’t have much growth to give. Vitner predicts it will grow just 1.5 percent in 2013, down from 2.2 percent in 2012.
The biggest hit to the economy is expected to come from the end of a two-year Social Security tax cut. The so-called payroll tax is scheduled to bounce back up to 6.2 percent from 4.2 percent in 2011 and 2012, amounting to a $1,000 tax increase for someone earning $50,000 a year.
“Even with this deal, fiscal policy will still be a net drag on economic growth,” Vitner said. “The expiration of the payroll tax holiday will reduce after-tax income for all workers and hit lower to middle income families the hardest.”
Mark Zandi, chief economist at Moody’s Analytics, calculates that the higher payroll tax will reduce economic growth by 0.6 percentage points in 2013. The other possible tax increases — including higher taxes on household incomes above $450,000 a year — will slice just 0.15 percentage points off annual growth, Zandi said.