Democrats face internal cliff hangups

WASHINGTON - While Republican lawmakers headed home for the holidays in disarray over the fiscal cliff negotiations, Rep. Keith Ellison, D-Minn., struck a defiant tone for the endgame that could play out this week.

"With Republicans in Congress unable to even ask millionaires to pay their fair share, any agreement to meet our year-end deadlines will now need the support of progressives to pass," he said Friday.

But any bipartisan deal to avert the looming $500 billion hit of tax hikes and spending cuts also is more than likely to need another group of Democrats: representatives such as rural Minnesota DFLer Tim Walz.

While the wrangling over the ill-fated "Plan B" highlighted GOP divisions over raising tax rates on the wealthy, Walz and Ellison illustrate fissures among Democrats over concessions on spending cuts.

Ellison, co-chair of the Congressional Progressive Caucus, speaks for a large bloc of liberals who are resisting any deals that could result in benefit cuts for people on Medicare, Medicaid and Social Security.

Walz has led an effort to force a House vote on President Obama's initial plan to maintain lower tax rates for incomes less than $250,000 while allowing rates on higher tax brackets to increase. So far, he has received zero of the two dozen Republican backers he would need. But he also has argued that it is "disingenuous" to criticize Republicans for intransigence if Democrats aren't willing to give on spending.

"I'm willing to lay it on the table," Walz said Friday, a day after House Speaker John Boehner cancelled a vote on Plan B, his plan to limit tax rate hikes to millionaires. "I don't know if it's the right way to go, but in negotiating in good faith, to reject it in its entirety before it's been brought forward as a proposal is where we get into these problems."

'Off the table'

The hard part has been putting specifics on the spending cuts that House GOP leaders have made a priority in their fiscal cliff negotiations. Both sides have demanded that the other lay out the details first.

Meanwhile, Boehner has run into a near rebellion within his own caucus by agreeing in principle to raise new revenues, at least in part by raising tax rates on the wealthy.

Obama also has run afoul of a significant number of congressional Democrats by agreeing to change the way cost-of-living increases are calculated for Social Security and other government benefits.

Those are the Democrats that Ellison says will be needed for any deal, noting that 102 of them recently signed a letter saying that "Social Security should be off the table." That's a little more than half of the Democratic House caucus.

Minnesota's two DFL senators also have resisted making Medicare and Social Security part of a year-end budget deal, arguing that any proposals should be put on a separate track for long-term entitlement reform.

Sen. Al Franken has talked about finding efficiencies in health care by letting Medicare officials negotiate directly with pharmaceutical companies to cut prescription drug costs.

Franken and Ellison also argue that Social Security does not add to the debt. That claim is disputed by budget experts who note that while the Social Security Trust Fund is technically flush, that is only because government indebtedness makes up the growing gap between payroll taxes and benefit payments.

Sen. Amy Klobuchar has suggested that she could support reforms like raising the retirement age or the income limit on Social Security taxes so that the affluent pay more.

While she has not advanced those plans as part of a fiscal cliff deal, she told ABC News' "This Week" on Sunday "we should start making some meaningful reform on the debt."

'Refuse to believe'

Whether there's a grand bargain in the making, or just a stop-gap measure, any further White House concessions on entitlement spending would certainly put pressure on Minnesota Democrats who until now have been able to watch the spectacle of GOP division.

House Republicans have been wrestling about whether to abandon the Grover Norquist anti-tax pledge, with Minnesotans John Kline, Erik Paulsen and Chip Cravaack suggesting they're willing to consider ways of raising tax revenue by cutting deductions and credits.

But on Boehner's Plan B calling for tax rate increases for millionaires, there was mostly silence, including from Rep. Michele Bachmann, R-Minn., a Tea Party fiscal hawk whose office declined to comment on the plan.

Press aides for Paulsen and Kline did not return calls and e-mails seeking comment. Departing one-term Rep. Chip Cravaack said early Thursday he was prepared to vote against the Plan B proposal unless it was paired with significant spending cuts.

But with time expiring and no major plan for spending cuts on the table, it appears that there is little time for anything other than an emergency measure averting tax hikes for the middle class on New Year's Day.

"We still have to find a solution," Walz said. "I refuse to believe we cannot do it."

Klobuchar, for her part, appealed to the spirit of the holiday season. "I would love to see a bigger deal," she said. "There's always miracles. It's Christmas."

Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.