Republicans divided over next moves

Senate and House Republicans are headed in different directions on addressing the fiscal cliff.

Some GOP senators want to strike a quick deal this year, while House conservatives prefer holding out for major structural changes to the tax code and entitlements that would be enacted in 2013.

Sen. Bob Corker (R-Tenn.), who has drafted legislation to deal with the fiscal cliff, noted that the White House and Congress have been debating taxes and entitlement reform for the last couple of years.

“It’s just a matter of doing it,” Corker said in an interview with MSNBC on Monday. “Candidly, [decisions] can be made in two to three days.”

Corker says his 242-page bill would cap federal tax deductions at $50,000 and create “private options” that would compete with Medicare, without capping Medicare’s growth.

House conservatives say stringent reforms need to be made to restrain Medicare spending; otherwise, the program will become insolvent.

“A majority of the Senate Republican caucus want some sort of deal in the lame-duck and is willing to compromise more fundamentally than the House Republican caucus,” said Steve Bell, senior director of economic policy at the Bipartisan Policy Center, who has kept in frequent contact with Republican lawmakers on deficit-reduction proposals.

“The Senate Republican caucus has many more members in it willing to go along with a tax-rate increase on $1 million and above or $250,000 and above if they would get a reasonable deal on Medicare and Medicaid, but it would fall short of premium support [reforms],” he said, referring to proposals to raise taxes on families earning more than $250,000 or $1 million annually. 

House Republicans argue that four or five weeks is not enough time to make the comprehensive, programmatic changes they favor. They want dramatic structural changes to Medicare and Medicaid — as outlined in the House-passed budget plan — in return for compromising on taxes.

“On the House side, they’ve already taken the tough votes on Ryan’s budget and run for reelection. After having been pounded on Medicare, they say, ‘We’re not backing off,’ ” Bell said.

The House-passed blueprint, authored by Budget Committee Chairman Paul Ryan (R-Wis.), would turn Medicare into a premium-support plan, in which the government would help beneficiaries pay for insurance premiums instead of reimbursing healthcare providers directly. Ryan’s plan would also transform Medicaid into a block-grant program, which is a non-starter for Democrats.

Many House Republicans want to stick with the reforms they endorsed and defended during the bruising 2012 campaign.

“We believe that significant, fundamental reform to save, strengthen and secure Medicare and Medicaid are imperative. Whether or not that can happen in a lame-duck session in a discussion about tax reform as well, I’m not sure that we get there,” said Rep. Tom Price (R-Ga.), a leading conservative who fell short in his recent bid to become House GOP conference chairman.

“It doesn’t make any sense to nibble at the sides of these things if you aren’t going to actually solve the problems; that’s why we believe so strongly in the budgets that we put forward the last two years,” he added. 

“Of course I would prefer something like the Ryan budget,” said Rep. Tom Cole (R-Okla.), a member of the House Budget Committee. “A lot depends on what the Democrats put on the table, and that’s been the problem all along. The president’s talked vaguely about it, but he’s not presented any significant entitlement reform in any of his budgets.

“Our opening position is pretty much the Ryan budget, and we’ll see what they want to counter with that. So far they haven’t countered with anything,” he said.

Speaker John Boehner (R-Ohio), meanwhile, has tried to push negotiations beyond the lame-duck session. He told President Obama and other leaders at a pre-Thanksgiving meeting that Congress should work on tax and entitlement reform next year.

Senate Republicans in general seem more eager to forge a deal with Democrats. Sens. Saxby Chambliss (R-Ga.), Mike Crapo (R-Idaho) and Tom Coburn (R-Okla.) have negotiated with Democrats during most of the 112th Congress on a broad deal based on the work of the Simpson-Bowles commission.

Corker, Chambliss and Sen. Lindsey Graham (R-S.C.) have all said in recent days that they are willing to break the anti-tax pledge sponsored by Grover Norquist and his Americans for Tax Reform.

Liberal Senate Democrats have mobilized to keep changes to Medicare, Medicaid and Social Security at a minimum.

Sens. Jay Rockefeller (D-W.Va.) and Tom Harkin (D-Iowa) have circulated a letter among colleagues urging Obama to stand firm against cuts to entitlement programs.

House Republicans worry that rushing to strike a deal before Jan. 1 will relieve the pressure to overhaul the structure of Medicare and Medicaid.

“Clearly, the House Republicans are far more interested in the quality of the reform and confident the numbers will come out fine if they keep fixed on that,” said Patrick Louis Knudsen, a senior fellow at the Heritage Foundation who served 20 years on the House Budget Committee.

There are some Senate Republicans who agree with their House counterparts, however. 

Retiring Sens. Jon Kyl (R-Ariz.) and Kay Bailey Hutchison (R-Texas) have both come out in support of a two-step process.

During an interview on CNN’s “State of the Union” on Sunday, Kyl, the minority whip, said, “I think it’s likely that there will be a solution that’s not a final solution by any means. It’s not a big solution. But will get us through the end of the year into next year with a plan for trying to deal with these issues long-term over the course of the next Congress.”

What is in such a plan could divide the GOP. 

“On the Senate side there’s much more interest in reaching a number, and on the House side there’s a lot more interest in changing the program,” said Jim Kessler, senior vice president for policy at Third Way, a Democratic think tank. 

Kessler said Senate Republicans are looking to make more modest changes to entitlement programs, while House Republicans want thorough restructurings.