"Fiscal cliff" struggle prompts Republican infighting

(Reuters) - Republicans in the Congress attacked each other on Tuesday over their leadership's "fiscal cliff" offer to Democratic President Barack Obama as a group of governors visited the White House to voice concern about the impact on the states of the year-end tax-and-spending deadline.

The disarray in Republican ranks over how far to compromise the party's anti-tax stance could complicate what are expected to be intense negotiations between House Speaker John Boehner and Obama. Each will need the backing of their respective troops in Congress in order to bargain credibly.

The fiscal cliff refers to steep tax increases and deep automatic spending cuts slated to start to take effect on New Year's Day. If Congress and Obama do not act to stop them, economists have warned the U.S. economy could be thrown back into recession.

The disagreements among Republicans surfaced as negotiations on a deficit reduction plan designed to supplant and avert the automatic cuts and tax hikes got more serious, with both parties having presented opening offers.

Senator Jim DeMint, a South Carolinian with a following among small-government conservatives, lashed out at an offer sent on Monday to Obama by Boehner, a fellow Republican.

"Speaker Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more," DeMint said in a statement.

In the House of Representatives, two first-term Republican Tea Party stalwarts - Tim Huelskamp of Kansas and Justin Amash of Michigan - were removed by party leadership from the powerful budget committee in what Huelskamp called "a vindictive move."

The Republican leadership offered no immediate explanation for the unusual action, but Boehner has had problems bringing in line the large Tea Party wing in the House. Elected to Congress in force in 2010, they regard the speaker as too much of a compromiser and tied his hands during talks in 2011 on raising the debt ceiling.

"The GOP leadership might think they have silenced conservatives, but removing me and others from key committees only confirms our conservative convictions," said Huelskamp.

Washington interest groups are now fully consumed by the cliff, and some are in a bit of a panic about what the talks might bring.

Tensions erupted on Tuesday at a forum convened by a fiscal responsibility group called Fix the Debt, which seeks to reduce the federal government's debt and includes a range of business, think tank and political leaders.

Audience members stood and repeatedly interrupted Republican Senator Rob Portman of Ohio as he attempted to make a speech. They urged protections from cuts for the Social Security and Medicare social safety net programs.

Others shouted down the protesters until they marched out of the forum, where Democratic Senate Finance Committee Chairman Max Baucus also made remarks.

U.S. stock markets opened slightly higher, with the benchmark Dow Jones industrial average up less than 1 percent after weeks of gyrations tied to the debate on Capitol Hill.

GOP OFFER MADE

In an important step, Boehner on Monday called for steep spending cuts, but gave no ground on Obama's proposal to raise tax rates on the wealthiest Americans.

The central dispute between the two parties has been what to do about low individual income tax rates that will expire at year-end. The low rates were first signed into law a decade ago by former President George W. Bush.

Obama wants to extend the low rates for 98 percent of taxpayers, but not for the top 2 percent. Republicans have insisted that the low tax rates be extended for the wealthy as well.

The White House dismissed Boehner's proposal within an hour of its being made public, the same treatment Republicans gave Obama's deficit reduction plan offered last week.

While the offers and counter-offers between Republicans and Democrats may ultimately create the conditions for actually getting in a room together and bargaining at length, so far the moves have been out in public and mostly for show.

Washington is awash in competing plans to cut the federal deficit. A think tank with ties to the Obama administration laid out another plan on Tuesday, urging the president to go bold and seek more concessions from Republicans on tax hikes.

(Reporting by Thomas Ferraro, David Lawder, Kim Dixon, Fred Barbash, Rachelle Younglai; Editing by Jackie Frank)

Source: http://news.yahoo.com/fiscal-cliff-struggle-prompts-republican-infighting-165858328--business.html

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