All in Pa. delegation voted for fiscal tax bill
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WASHINGTON -- Some of the angst over passing a compromise to keep the economy from tumbling over the fiscal cliff could have been avoided had the vote been left to the Pennsylvania delegation alone.
Every member of the delegation voted in favor of the American Taxpayer Relief Act, helping secure decisive -- if not easy -- passage on a 257- 167 vote in the House overnight Tuesday. Sens. Pat Toomey, R-Pa., and Bob Casey, D-Pa., also voted yes in a New Year's Day Senate vote on the measure.
Most other state delegations were split largely along party lines.
Overall, all but 16 Democrats voted yes, while two-thirds of Republicans voted no.
The deal averts middle-class tax increases while increasing tax rates on individual income above $400,000 and household income over $450,000. It also extends unemployment benefits and delays until March automatic spending cuts to the Pentagon and numerous other agencies.
Pennsylvania's most conservative Republicans -- like some of their counterparts across the country -- said they reluctantly approved the deal to avert fiscal catastrophe, including a hit to the stock market. They are already setting the stage for a bitter battle over spending cuts and debt reduction.
"The president's made it very clear -- he doesn't even want to have a discussion about it because he knows this is where we have leverage," Mr. Toomey said in a Wednesday appearance on MSNBC.
He said he is prepared to tolerate a partial government shutdown to force action if necessary.
"A temporary disruption because we have to furlough the workers at the Department of Education or close down some national parks or not cut the grass on the [National] Mall -- that's not optimal; that's disruptive, but it's a hell of a lot better than the path that we're on and the crisis we're going to have if we think that we can just keep giving this president unlimited debt," Mr. Toomey said.
Senate GOP leader Mitch McConnell of Kentucky said Wednesday that the bipartisan agreement to prevent tax increases on 99 percent of Americans brings with it the opportunity -- and responsibility -- for Democrats to join Republicans in cutting spending.
"That's the debate the American people want. It's the debate we'll have next. And it's a debate Republicans are ready for," he said in a statement emailed to reporters.
"The president claims to want a balanced approach to solve our problems. And now that he has the tax rates he wants, his calls for 'balance' mean he must join us in our efforts to achieve meaningful spending [reform] and government reform," Mr. McConnell wrote.
President Barack Obama has acknowledged that the American Taxpayer Relief Act doesn't fully solve the fiscal crisis. More work will be needed, including changes in the Medicare program and cuts to government spending.
"We are continuing to chip away at this problem step by step," he told reporters just before midnight Tuesday. "We can settle this debate, or -- at the very least -- not allow it to be so all-consuming all the time that it stops us from meeting a host of other challenges that we face."
Rep. Pat Meehan, R-Delaware County, said Republicans have done their part to compromise and now it's time for Democrats to show their willingness to cut spending and tackle the debt crisis.
G. Terry Madonna, a political scientist and pollster at Franklin & Marshall College in Lancaster, said he wasn't surprised to see Pennsylvania's moderate suburban Republicans like Mr. Meehan vote for the deal, but conservatives like Mike Kelly of Butler surprised him.
In a statement after the vote, Mr. Kelly said the legislation is imperfect but he voted for it because it retains the child tax credit and provides a degree of economic certainty for taxpayers. The next step, he said, is to pursue spending cuts aggressively.
Mr. Meehan said failure to pass the legislation "would have had disastrous consequences for middle-class families and fueled even more Washington spending."
Passage stopped across-the-board cuts that state budget officials say would have cost Pennsylvania $300 million in federal funding. The cuts would have included a $76 million cut to special education and Title I funding for schools in the state's poorest neighborhoods. That's more than 1 percent of the state's $27.2 billion general fund budget.
It's a significant enough portion of the budget to motivate Pennsylvania Republicans to support the compromise on the fiscal cliff, even though the agreement has been widely characterized as a win for the Democratic administration.
Most notably, they backed away from a no-tax pledge in order to allow tax rates to increase from 35 percent to 39.6 percent on individual income over $400,000 and family income over $450,000. The increase is expected to raise about $620 billion over 10 years. The compromise also allowed a payroll tax cut to expire, which will increase taxes on salaries by 2 percentage points for American workers.
"It was a win not just for Democratic principles but for Americans and for our future," Rep. Allyson Schwartz, D-Philadelphia, said Wednesday.
She noted that a lot of her Republican colleagues had been outspoken in their opposition to tax increase but seemed to come around when they realized that additional revenue would be necessary to reduce the deficit, provide economic certainty and increase revenue in a fair way.
"They surrendered what they needed to surrender, and in the long run it was politically smart," Mr. Madonna said. "They had to agree to what they had to agree on" so they can move on to spending cuts, which is what Republicans really care about.
Mr. Meehan said he worried that a failure to avert the cliff would have sent the country back into a recession, drastically increased unemployment, raised taxes on the middle class and subjected seniors to new taxes on savings.
"I'm not willing to let those consequences happen on my watch," he said.
Rep. Bill Shuster of Blair County, one of Pennsylvania's most conservative Republicans, said the cost of inaction was too high for his constituents and for the country. He said the compromise stopped what would have been a broad and massive tax hike.
Beyond the Beltway, business leaders decried the legislation, saying it fixed none of the structural problems that led to the country's fiscal crisis.
The budget is still more than $1 trillion and the national debt is still growing out of control, said Kevin Shivers, state director of the National Federation of Independent Businesses, which has 15,000 members in Pennsylvania.
"While the compromise ... mitigates the impact of the income tax hike, it still takes money out of the productive economy to finance a government that everyone knows we can't afford," Mr. Shivers said.
Still, he noted, taxes for most small businesses will remain unchanged under the new law.
In Chicago, the Heartland Institute -- a nonprofit founded to free-market solutions to economic problems -- criticized the deal, saying it does little to nothing to reduce spending while it complicates an already incomprehensible tax code.
Marilyn R. Flowers, a tax expert for the institute and professor of economics at Ball State University, said sacrifice is the only way out of the fiscal crisis and no one seems willing to go there.
"House Republicans gave lip service to spending restraint, and especially entitlement reform, but managed to play their hand so clumsily that no significant cuts in spending were included in the final deal," she said.
Tuesday's late night vote was the last for 10-term Democrat Tim Holden of Schuylkill County, three-term Democrat Jason Altmire of McCandless, two-term Democrat Mark Critz of Johnstown and six-term Republican Todd Platts of York County.
Members of the new Congress -- including Matt Cartwright, D-Lackawanna, Scott Perry, R-York, and Keith Rothfus, R-Edgeworth -- are to be sworn in today.
First Published January 3, 2013 12:00 am