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For many Republicans, no good options on "fiscal cliff"

News Analysis

Imagine, if you will, that you are a returning Republican member of the House of Representatives. You want to do what you believe is right for the country; you also want to avoid a vote that will keep you from the opportunity to win reelection two years from now. And you will soon have to make a decision on the issue that has dominated Washington since Election Day: How to avert the looming combination of spending cuts and tax hikes that has come to be known as the "fiscal cliff."

It won't be easy. The clearest sticking point between Republicans and Democrats comes on taxes: Democrats largely want to allow the Bush-era tax cuts to expire on income above $250,000 - effectively raising taxes on the highest earners - and Republicans don't. Many Republicans, in fact, have signed Grover Norquist's pledge promising never to vote for tax increases of any kind. According to "the pledge," they could only vote to close loopholes and deductions in the tax code if they are coupled with reductions in overall income tax rates. Anything that would increase "revenues," in the terminology of Washington - that is, the amount of money the government takes in from taxes - is off the table.

There has been some pushback to Norquist's pledge in recent days from Republicans who say they will not be held hostage by it. They have not expressed support for raising tax rates on the highest earners - an issue that President Obama campaigned on - but they say they are willing to at least raise revenues by closing deductions and loopholes. But these voices have largely come not from the House but from the Senate. And the opinion of Senate Republicans isn't all that important, since Democrats control that chamber.

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What matters more is what happens in the GOP-led House. And for many GOP lawmakers there, voting to increase revenue means increasing the risk of facing a well-funded challenger in their next primary campaign. This wouldn't simply be because they angered Norquist: While the media savvy founder of Americans for Tax Reform gets much of the attention in the tax debate, his organization has not spent much to unseat Republican candidates in recent years. Of the $15.8 million Americans for Tax Reform spent in the 2012 election cycle, just $3,500 was used to target Republicans. In the 2010 election cycle, just $300,000 of the $4 million spent by the group was used against Republicans.

But Americans for Tax Reform is not the only game in town. The Club for Growth, for example, spent $10 million against Republicans in the 2012 cycle. The group is powerful enough that when West Virginia GOP Rep. Shelley Moore Capito announced she was seeking a 2014 Senate seat, a statement by its president criticizing Capito for "a long record of support of bailouts, pork and bigger government" generated headlines. For a Republican lawmaker, angering the Club for Growth and other anti-tax groups could result in an influx of outside money that could sink your reelection bid. It's no wonder that when CBS News' political director John Dickerson asked a senior House leadership aide if a majority of House Republicans what the chances were that a majority of House Republicans would vote for a tax increase, the response was "pretty close to zero."

Yet House Republicans cannot simply vote against any tax hikes and be on their way. That's because if lawmakers do not take action on the "fiscal cliff," Americans will face a tax hike at the end of the year - when the Bush-era tax cuts, the payroll tax cut, and other ostensibly-temporary tax breaks expire. These Republicans are in a box: If they vote in favor of a deal that raises revenues, they could face a primary challenge. But if they vote against any deal, they'll be partially responsible for an across-the-board tax hike - and polling suggests Americans will place the blame largely on the GOP's shoulders. Meanwhile, Democrats have no intention of agreeing to a deal to avert the "cliff" that does not include an increase in revenue.

Lawmakers and their aides are now scrambling to find a way to pass a deal that both sides can agree on. But the fundamental disagreement over revenue gives them little room to negotiate: Even the Republicans who have agreed to increased revenues have ruled out raising tax rates on the highest earners, which is the lynchpin of Mr. Obama's position. One possible path involves Democrats agreeing to large enough structural changes to Medicare and Medicaid that Republicans who vote to increase revenues can argue that the trade off was worth it. If such a deal gets floated, keep an eye on how Club for Growth and its allies respond.

Mr. Obama and his Democratic allies have said they are open to some cuts (or "savings") to entitlement programs - Mr. Obama has floated $340 billion in savings from health care programs - but there is virtually no appetite for the major cuts being sought by Republicans. Outside advocacy groups aligned with Democrats, including the AARP and AFL-CIO, are already sounding the alarm at the prospect of serious cuts to Medicare and Medicaid. (The White House has suggested that Social Security is mostly off the tablein this debate.) Sen. Dick Durbin, D-Ill., on Tuesday urged liberal Democratsto "take an honest look at Medicare," but any deal that makes major changes to the program would face strong opposition from many Democrats. And Durbin said Tuesday that any major changes to entitlement programs should not be a part of the "fiscal cliff" negotiations.  

With no good options on the table, both sides are trying to increase their leverage by taking their case to the public. Mr. Obama meets with middle-class Americans and business leaders today to discuss the issue - he also met with small business leaders Tuesday - and on Friday he heads to a toy manufacturing plant in Pennsylvania to "continue making the public case for action by visiting a business that depends on middle class consumers during the holiday season." The president is pushing Republicans to agree to extend the Bush-era tax rates on the 98 percent of Americans making less than $250,000 per year - something the GOP does not want to agree to do, since it means losing leverage in their efforts to extend the lower tax rates on higher income as well.

Senate Minority Leader Mitch McConnell, R-Ky., is criticizing Mr. Obama for the trip, saying he's "back out on the campaign trail" making the same old arguments instead of "sitting down with lawmakers of both parties and working out an agreement." His colleague in the Senate, Majority Leader Harry Reid, D-Nev., said Tuesday that there has been "little progress" in negotiations because Republicans have refused to offer specific proposals despite "some happy talk about doing revenues." Seemingly to counter the president's trip, House Republican leaders announced plans to meet with small business owners on December 5 to help make the case that "these businesses employ the majority of Americans and will be the most adversely affected by an increase in tax rates." And Norquist has appeared in a string of interviews to argue that Republicans who vote for tax hikes will face the same fate as one-term President George H.W. Bush after Mr. Bush broke his "read my lips" pledge promising no new taxes.

Both sides have some additional leverage: Both Republicans and Democrats are well aware that if the country does indeed go off the "cliff" - which is actually a slope- it would seem to help the Democrats at the negotiating table, as they would then be in position to push what is now a tax cut for the vast majority of Americans. Republicans, meanwhile, can potentially extract extra concessions from Democrats in exchange for a vote to increase the debt ceiling, which will once again need to be raised early next year.

It all adds up to a situation in which no one seems to be able to even come up with the broad parameters of a potential deal, despite the fact that the deadline to avert the "cliff" is just one month away. While Mr. Obama spoke over the phone Saturday to House Speaker John Boehner and aides continue to negotiate behind closed doors, the president and Boehner have not met since November 16 -- and currently have no meetings scheduled. Perhaps it's no surprise that when Americans were asked whether lawmakers will act like "spoiled children" or "responsible adults" in the negotiations, the former won by a more than two-to-one margin.

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