US House Republicans say resigned to tax hike in fiscal cliff - Reuters India

By Richard Cowan and David Lawder

WASHINGTON | Fri Dec 28, 2012 7:35am IST

WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives are resigned to seeing some sort of income tax increase in legislation to avoid a "fiscal cliff," but such efforts could be doomed in the absence of spending cuts, some Republican lawmakers say.

Congress and President Barack Obama are gearing up for a last-ditch attempt to avoid $600 billion in tax increases and spending cuts that could halt progress in the U.S. economy, which lately has been showing signs of gaining ground.

The White House said Obama will host a meeting on Friday with the four top congressional leaders - Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House of Representatives Speaker John Boehner and House Minority Leader Nancy Pelosi. The Republicans have a majority in the House, while Obama's Democrats control the Senate.

House Speaker John Boehner informed his 241 Republican members on Thursday that the House would come back into session late on Sunday in anticipation of possible fiscal-cliff votes.

This Sunday's session "was about the only thing decided" during a half-hour conference call among House Republicans, said Representative Jeff Flake of Arizona, who will leave the House at the year-end to join the Senate.

In an interview shortly after the phone call, Flake said Republicans in the House and Senate were resigned to seeing some sort of increase in top income-tax rates, although he did not specify a dollar threshold.

While he said he did not want to see any income tax rates go up, Flake said: "I've felt we should've moved a week or two ago to accept the top rate going up and tell the president 'congratulations.'"

The bigger problem in avoiding the fiscal cliff, Flake said, would be if Obama demanded cancellation of the $109 billion in automatic spending cuts set to begin on January 2 without alternative spending cuts to replace them.

"There will be resistance from a lot of House conservatives to a deal that does that," Flake said.

Asked if the days leading up to next Monday, December 31 could thus be fruitless, Flake said, "That is what I am afraid of."

A Senate Democratic aide did not discount the possibility of some spending cuts being included in a limited bill to avert the fiscal cliff - even if they fell far short of the $1 trillion or so in cuts over 10 years that at one point was being discussed in talks between Boehner and Obama.

'TIRED OF WAITING'

Representative Tom Cole of Oklahoma, who also participated in Thursday's House Republican conference call, said its overarching theme was that the Senate should take the bill passed by the House earlier this year to extend all expiring income tax rates and amend it in a way senators see fit.

The House could then either accept that measure, or amend it, and bounce it back to the Senate.

"People are tired of waiting on the Senate to do things," Cole said.

Senate Democrats counter that last July they passed a bill extending the Bush-era tax cuts - except on net household income above $250,000 a year.

Nevertheless, the Senate must still couple its tax-cut bill with Obama's request for extending jobless benefits and possibly some other budget or tax measures.

"I assume the House would want to come back on Sunday knowing that we (the Senate) were going to do something on Friday or Saturday," said Senator Roy Blunt of Missouri, a member of the Senate's Republican leadership.

House Republican leaders informed their members that the chamber could stay in session dealing with the fiscal cliff through Wednesday, January 2 - the last day of the current Congress and a day before the new Congress is sworn in.

Cole said Boehner "made very apparent he is not interested in passing a bill that didn't have a majority of Republicans" supporting it.

But Cole said this was "not quite as elusive to achieve" as many people thought. He said Boehner had "over 200 votes" out of 241 Republicans for his failed "Plan B" - a bill extending lower tax rates except for millionaires - which everyone knew would not become law.

Thus, a bill with prospects of being enacted could attract more support, Cole suggested.

If a new bill came to the House floor to raise taxes on upper incomes, Boehner could force passage with a combination of Democratic and Republican votes.

With public opinion polls showing that Republicans would get most of the blame if the country were to go over the fiscal cliff, some House Republicans have become nervous about their political fortunes.

Both Flake and Cole told Reuters that during Thursday's conference call, some Republicans urged Boehner to bring the House back to Washington sooner than Sunday - a request Flake described as being aimed at improving the "optics" of House Republicans being absent from Washington so close to the December 31 deadline.

But Boehner stuck with his promise to give members at least 48 hours notice of a return.

Cole remained upbeat about a positive end to the fiscal-cliff mess that has gripped Washington for two months now.

"I'm a hopeless optimist. I still think there's a chance we'll get things done. All major deals get done at the end," said Cole, who was one of the first House Republicans to say that he could go along with raising some income-tax rates. (Editing by Fred Barbash and David Brunnstrom)