- Associated Press - Wednesday, July 20, 2011

WASHINGTON (AP) — Defying a veto threat, the Republican-controlled House voted Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced-budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default.

The 234-190 vote marked the power of deeply conservative first-term Republicans, and it stood in contrast to calls at the White House and in the Senate for a late stab at bipartisanship to solve the nation’s looming debt crisis.

President Obama and a startling number of Republican senators lauded a deficit-reduction plan put forward earlier in the day by a bipartisan “Gang of Six” senators that calls for $1 trillion in what sponsors delicately called “additional revenue” and some critics swiftly labeled as higher taxes.

The president said he hoped congressional leaders would “start talking turkey” on a deal to reduce deficits and raise the $14.3 trillion debt limit as soon as Wednesday, using that plan as a roadmap.

Wall Street cheered the news of possible compromise as well. The Dow Jones Industrial Average soared 202 points, the biggest one-day leap this year.

Treasury officials say that without an increase in U.S. borrowing authority by Aug. 2, the government will not be able to pay all its bills, and a default could result in severe consequences for the economy.

Yet a few hours after Mr. Obama spoke at the White House, supporters of the newly passed House measure breathed defiance.

“Let me be clear: This is the compromise. This is the best plan out there,” said Rep. Jim Jordan, Ohio Republican, who heads a conservative group inside the House known as the Republican Study Committee.

The legislation, dubbed “cut, cap and balance” by supporters and backed by tea party activists, would make an estimated $111 billion in immediate reductions and ensure that overall spending declined in the future in relation to the overall size of the economy.

It also would require both houses of Congress to approve a balanced-budget amendment to the Constitution and send it to the states for ratification. The amendment itself would require a supermajority vote in both houses of Congress for any future tax raises.

With time dwindling, the day’s events did little to suggest a harmonious end was imminent in a defining clash between the two political parties.

Senate Democrats have announced they will oppose the House passed-measure, although it could take two or three days to reject it.

Yet there were signs that with Tuesday night’s vote behind them, House Republican leaders might pivot swiftly.

Even before the vote, House Speaker John A. Boehner, Ohio Republicans, told reporters that it also was “responsible to look at what Plan B would look like.”

And House Majority Leader Eric Cantor, Virginia Republican, issued a statement saying of the Gang of Six proposal: “This bipartisan plan does seem to include some constructive ideas to deal with our debt.”

Debate in the House was along predictable lines, and only nine Republicans opposed the bill and five Democrats supported it on final passage.

“Our bloated and obese federal budget needs a healthy and balanced diet, one that trims the fat of overspending and grows the muscle of our nation’s economy,” said Rep. Reid J. Ribble, Wisconsin Republican, during debate on the measure.

Mr. Ribble is one of 87 first-term House Republicans determined to reduce the size of government.

Democrats said the measure, with its combination of cuts and spending limits, would inflict damage on millions who rely on Social Security, Medicare and other programs. “The Republicans are trying to repeal the second half of the 20th century,” said Rep. Sander M. Levin, Michigan Democrat.

Mr. Boehner played a muted role in public during the day. He did not speak on the House floor on the legislation but issued a statement afterward saying it “provides President Obama with the debt limit increase he’s requested while making real spending cuts now and restraining future government spending and debt that are hurting job growth.”

He did not discuss what alternatives he had in mind, although the Senate’s top two leaders have been at work on one that would let the president raise the debt limit without prior approval by Congress.

The Gang of Six briefed other senators on the group’s plan after a seemingly quixotic quest that took months, drew disdain at times from the leaders of both parties and appeared near failure more than once.

It calls for deficit cuts of slightly less than $4 trillion over a decade and includes steps to slow the growth of Social Security payments; cut at least $500 billion from Medicare, Medicaid and other health programs; and wring billions in savings from programs across the face of government.

It envisions tax changes that would reduce existing breaks for a number of popular items while reducing the top income bracket from the current 35 percent to 29 percent or less.

The tax overhaul “must be estimated to provide $1 trillion in additional revenue to meet plan targets,” according to a summary that circulated in the Capitol.

Some Republicans noted a claim contained in the summary that congressional bookkeeping rules actually could consider the plan a tax cut of $1.5 trillion. That credits sponsors for retaining income tax cuts enacted at all income levels when George W. Bush was president.

The Gang of Six includes three Democrats: Sens. Kent Conrad of North Dakota, Mark Warner of Virginia and Richard J. Durbin of Illinois, a member of the leadership.

The three Republicans, all conservatives, are Sens. Mike Crapo of Idaho, Tom Coburn of Oklahoma and Saxby Chambliss of Georgia, who has a particularly close relationship with Mr. Boehner dating to their days together in the House.

In recommending higher government revenues, Republicans in the group challenged party orthodoxy that has held sway for two decades, ever since President George H.W. Bush memorably broke his “no new taxes” pledge to make a deficit reduction deal with congressional Democrats.

In the years since, refusal to raise taxes has become a virtually inviolable article of faith among Republicans, and used by them and their allies in countless political campaigns against Democrats.

Recently, Republicans who voted to repeal a tax subsidy for ethanol production drew criticism from Grover Norquist, a prominent anti-tax activist, for not applying the savings to deficit reduction.

Even so, in the hours after the Gang of Six briefed other lawmakers on their plan, at least one member of the Republican Senate leadership, Lamar Alexander of Tennessee, signed on as a supporter. So, too, did Sen. Kay Bailey Hutchison, Texas Republican.

“We have an opportunity to act like statesmen and avoid a debacle on Aug. 2, and it seems to me that all of our efforts should be focused on that,” added Sen. Roger Wicker, Mississippi Republican. He and others said the plan was well received at a weekly closed-door meeting of GOP senators.

Mr. Obama said the Gang of Six’s plan included “a revenue component” along with savings in Medicare and Social Security, making it the sort of balanced approach he long has advocated.

He also noted that the Senate’s two top leaders have been cooperating on a measure that would allow him to raise the debt limit without a prior vote of Congress while also setting up a special committee to recommend cuts to federal programs, including Social Security and Medicare.

“That continues to be a necessary approach to put forward. In the event that we don’t get an agreement, at minimum, we’ve got to raise the debt ceiling,” he said.

Associated Press writers Alan Fram, Jim Abrams, Erica Werner, Stephen Ohlemacher, Darlene Superville and Andrew Taylor contributed to this article.

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