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House Prepares To Take Up Senate Budget Compromise

Jan 1, 2013



This is TALK OF THE NATION. I'm Neal Conan in Washington. Early this morning, the Senate approved a fiscal cliff package that includes some important steps forward on taxes, an unemployment extension and a new farm bill, among others. But now it appears that bill may be in trouble in the House of Representatives. NPR senior Washington editor Ron Elving joins us now from his home here in Washington, D.C. Ron, Happy New Year.

RON ELVING, BYLINE: Happy New Year to you, Neal.

CONAN: And what's going on? The Republican Caucus is meeting. In fact, both caucuses are meeting.

ELVING: That's right. The Democratic Caucus in the House has been meeting for a little over two hours with Joe Biden, the vice president of the United States, who of course came to Capitol Hill and negotiated this deal on the Senate side with his old colleague Mitch McConnell, who is the Republican leader in the Senate, more or less sidestepping Harry Reid, who is the Democratic leader in the Senate.

But that's not what's gotten this bill into trouble. What's gotten this bill into trouble is that the House Republicans want to amend it and send it back to the Senate. Now that's not a formal decision that's been taken. That is the sentiment that's being expressed by House Republicans who have come out of their caucus, which began shortly ago and which is continuing.

And the House Republicans are expressing to their speaker, John Boehner, their desire to make changes to what the Senate agreed to at 2 o'clock, 2:30 this morning, and those changes would then necessitate the entire package be reconsidered by the Senate sometime tonight or tomorrow. And if they didn't get it done tonight or tomorrow, then the entire thing would collapse and die because the Congress, 112th Congress that's meeting right now, is going to end at the end of tomorrow night, and a new Congress will be sworn in on Thursday.

So this entire thing will be invalidated, this entire negotiated deal would be invalidated at that point if it has not been formally approved by both the House and Senate and then signed into law by the president.

CONAN: There's another deadline of sorts, and that's when the financial markets reopen. That would start this evening, when those markets reopen in Asia. There was some euphoria on the markets the last day they were open with news that it looked like a compromise might be achievable. This would presumably be very bad news.

ELVING: Yes, and we should emphasize that what we're dealing with at this point is the frustration of the House Republicans, who feel they had no voice in this negotiated deal that took place on the Senate side. It was, after all, negotiated between the White House and the Senate. They had no role. They had no voice.

And while John Boehner, the House speaker, may see advantages for the Republican Party in general in agreeing to this deal - and there's much to be said on both sides, that is Republican and Democratic side - for what's in this package right now, much to be unhappy about, much to be happy about for each side, it's a compromise, but John Boehner cannot tell these House Republicans that they had the same say in it that the White House and the senators did.

Therefore, they're going to be dissatisfied.

CONAN: And this is a sense that the majority of the Republicans in the Republican Caucus are opposed to this and want to amend it?

ELVING: We don't have an exact number. I'm not sure that they've even taken a vote in there. We should emphasize this is a closed-door meeting. The only intelligence we have about it comes from the people who come out the door and talk to reporters and then go back into the meeting.

And we don't know whether or not they are reflecting the will of the entire group or whether they're in fact the more vocal but perhaps less populous element within the caucus, the conference of Republicans there in the House. They may just be the most dissatisfied, the most angry, and therefore they may be the people who come out and want to tell their story.

It's possible that in this meeting, and we're now told there will be a second meeting of the House Republicans later on this afternoon, John Boehner will be able to make the case that if they don't pass what they got from the Senate, we're going over the cliff for real, and of course we went over the cliff at midnight last night. The question is: have we hit the ground yet?

It's a national holiday. We're all watching football games or wishing we were.


ELVING: And as a result, as a result we haven't had the real consequences. As you say, the markets are closed. People haven't gone back to work. By and large, a minority of people are working, a fraction of people are actually working today. So the real cliff, if you will, comes as we all go back to work and go back to business tomorrow. And of course these tax increases would then kick in if we don't get a deal.

CONAN: What about the sequester cuts? These are the across-the-board cuts to discretionary spending. That would include the Defense Department.

ELVING: That would kick in, as well. We have gone over the cliff in a technical sense. We just haven't really had a full business day to feel the impact yet. But all those cuts would be ordered, of course they don't all take place within a moment, but they would be ordered as of tomorrow if we don't have a deal.

But you raise an excellent point by talking about the sequester and the spending side of the fiscal cliff because that's really what's bothering a lot of these House Republicans. Of course they don't like the tax increase on income over $450,000 for a couple or some of the changes to the estate tax or some of the other tax treatments that will take more money out of the pockets of the more affluent.

They've said they don't like that. But what they really don't like is that we haven't dealt with the sequester side, the spending side. We haven't said, all right, we're bringing in some more revenue through this compromise deal. What are we doing to cut spending? That's not nearly as clear because the Senate deal pushes off the sequester deadline for two months.

CONAN: Just to refresh on the timing. If the House of Representatives, the Republican Caucus effectively, decides they want to amend the bill that they got from the Senate early this morning, that would mean that the Senate would then have to reconsider the bill. There would be a meeting between the House and Senate to work out a deal, an agreement on both bills. And then by the time that's over, it's likely the 112th Congress will have expired, and we'll be back to square one.

ELVING: That's right, they would get together with Senate representatives, they call it a conference committee. They try to work out the differences. But whatever differences they worked out would have to be acceptable to a majority in the Senate, as well. And we already have seen the Senate vote once, and they decided they were going to go for this deal, and so we got a lopsided, overwhelming vote, only eight votes against it in the Senate early this morning.

So perhaps the Senate could also bring together a vote in favor of an amended version that was a little better from the House's standpoint. But to do that takes time. And we're basically out of time. In fact, we are already in overtime because we already passed the deadline on the cliff at midnight this morning.

CONAN: Ron Elving, we will definitely stay tuned. But thanks very much for the update.

ELVING: Thank you, Neal.

CONAN: NPR senior Washington editor Ron Elving. And amidst all this political uncertainty, well, it's having its economic effects, too, not just on consumers who may be restraining their buying, but on employers who may be restraining their hiring and on lenders who may be restraining their loans and on homebuyers who may be putting off that decision on whether or not to buy a home.

Yesterday David emailed us to say: My wife has a small business with six employees plus herself. Our combined income is above $250K. Unclear if she can keep all employees if payroll and personnel rates go up. Nicole also wrote in yesterday: The fiscal cliff is looming over our family of four and our plans for the next few years. We were planning to purchase a one-bedroom condo next year, small but the market's tight in Honolulu.

A raise in our taxes would make a huge dent in our down payment savings. Even a few thousand dollars would affect how much we would have to shell out in interest on a mortgage if we have to take that money that we had planned on putting down for a house and pay unexpected taxes. It's an absolutely nerve-wracking thing to do the math and see the money that we would ultimately lose.

So how is all this political uncertainty affecting your plans and your decisions? Give us a call, 800-989-8255. Email: talk@npr.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION. Later in the program, a political - a social and political history of the Rose Parade. But first, Marilyn Geewax, NPR's senior business correspondent, joins us here in Studio 3A. Marilyn, as always, thanks for coming in, and Happy New Year to you.


CONAN: And, well, it now appears that we may have to put all the assumptions we had made about this compromise agreement on hold.

GEEWAX: Boy, this is so confusing. I mean, talk about uncertainty. You know, this may seem like a lot of interesting theater for those of us who are here in Washington, but in terms of consumer confidences, employers' ability to go forward with hiring plans in January, all of that, this is really awfully tough.

For example, I mean, just think of some of the concrete impacts of what's happening here. The unemployment benefits, about 2.1 million people get these extended federal benefits. Those are due to run out as of this minute. They're out of money. That means for someone who is unemployed, it's January, you have a heating bill, the kids need coats, you have to have food, and you don't know if you're going to get that check or not because this is still hanging over you.

And at the same time, part of this fiscal cliff deal was - it's complicated to explain, but it had to do with milk prices. If Congress does not pass this, the price of milk could go up to $7 a gallon because of a complicated formula for federal subsidies and whatnot for milk.

So you may find yourself with no check and $7 milk. That's pretty tough. There are also lots of people on the higher end of the economic spectrum who don't know if they'll be hit with the alternative minimum tax. If that's not fixed today, that takes effect for the tax year of 2012, which means that you will owe thousands more on your taxes, and that's going to affect about 27 million people. So that's an awful lot of folks who are going to face a much higher tax bill.

CONAN: And those sequester cuts, if they go ahead, you could have hundreds of thousands of people out of work.

GEEWAX: Yes, there are about 800,000 people who are eagerly awaiting word on the sequester. That's this automatic spending cuts that are about to take place. And they have to start laying people off right now unless Congress were to pass this. And at least in this compromise that had been worked out in the Senate, it delays it for two months. So that's not a complete solution, but at least you would know that you would have a paycheck for January and February.

CONAN: That's the Senate deal that may or may not now be enacted. The other part of this is the economy in general. In the fall just before the election, we saw, well, consumer confidence increasing. We saw the economy beginning to pick up steam. It looked like in a lot of sectors we were doing better. That seems to have come to, at least to some degree, to a halt.

GEEWAX: Yeah, we get a lot of measures of consumer confidence, and they seem to be pointing in the same direction, that is there are good reasons for consumers to start feeling a little bit better. Yes, there are still many economic problems, without question, but the load on the consumer has really been lightened. That is they've whittled down their debt and maybe in a good way or in a bad way.

Let's say you had a lot of debt before on credit cards, and you had to file for bankruptcy. Well, that's not a pleasant experience, but the truth is now that debt is off of you and you can start to move on. So consumers were in a pretty good position to spend, and now they're completely worried.

CONAN: We're going to look, when we come back, at one of the sunnier spots in the economy that actually had been contributing to economic growth for the first time in many years, that's the housing market. That's all in disarray right now. We'll have to see how that goes. We're going to be talking with Robert Shiller, co-creator of the Case-Shiller Home Price Index. Stay with us. I'm Neal Conan. It's the TALK OF THE NATION from NPR News. Transcript provided by NPR, Copyright NPR.