* Obama says Republicans have a personal grudge
* President would veto Republican's "Plan B"
* Senate Republican says deal still possible this week
WASHINGTON, Dec 19 (Reuters) - The conflict over the stalled
"fiscal cliff" talks grew more heated Wednesday and threatened
to become even more so Thursday when the action is expected to
shift for the first time to the floor of the U.S. House of
Representatives.
In the absence of a bipartisan agreement, the Republican
leadership of the House plans to move a bill of its own to the
floor Thursday to avert the steep tax hikes and budget cuts set
for January.
But instead of serving as a show of unity for Republicans in
their wrangling with Democratic President Barack Obama, the
so-called Republican "Plan B," which was still evolving late
Wednesday, was exposing internal fractures because it includes a
tax hike on those earning $1 million or more, dividing anti-tax
conservatives.
The planned action by Republicans angered President Barack
Obama Wednesday, who accused opponents of holding a personal
grudge against him.
As a year-end deadline nears, Obama and House of
Representatives Speaker John Boehner are locked in intense
bargaining over a possible deal to avoid the so-called fiscal
cliff of harsh tax hikes and spending cuts that could badly
damage an already weak economy.
Obama said he was puzzled over what was holding up the talks
and told Boehner's Republicans to stop worrying about scoring "a
point against the president" or forcing him into concessions
"just for the heck of it."
"It is very hard for them to say yes to me," he told a news
conference in the White House. "At some point, you know, they've
got to take me out of it."
The rise in tensions threatens to unravel significant
progress made over the last week.
Boehner and Obama have each offered substantial concessions
that have made a deal look within reach. Obama has agreed to
cuts in benefits for seniors, while Boehner has conceded to
Obama's demand that taxes rise for the richest Americans.
However, the climate of goodwill has evaporated since
Republicans announced plans on Tuesday to put an alternative tax
plan to a vote in the House this week that would largely
disregard the progress made so far in negotiations.
On Wednesday, Obama threatened to veto the Republican
measure, known as "Plan B," if Congress approved it.
Boehner's office slammed Obama for opposing their plan. "The
White House's opposition to a backup plan ... is growing more
bizarre and irrational by the day," Boehner said through his
spokesman, Brendan Buck.
Boehner expressed confidence the House would pass the
legislation on Thursday, but Wednesday night it was still
unclear exactly what it would contain. That was reflected in a
late meeting of the Rules Committee of the House, which was
supposed to prepare the legislation for the floor but had little
actual wording in front of it as it struggled to complete its
task.
In an eleventh hour effort to avoid a potential defeat at
the hands of some of his own party members over the tax hike,
Boehner added spending cuts to Plan B that would convince
conservatives it was worth a risky vote.
Any fiscal cliff agreement by Obama and the Republican
leadership would need the support of their parties' rank and
file in Congress, and Thursday's vote on Plan B will be a test
of Boehner's ability to deliver votes on any eventual deal.
In an effort to help Boehner out, anti-tax activist Grover
Norquist gave his blessing to the bill.
But other conservative groups, including the influential
Club for Growth, were urging Republicans to vote against Plan B.
Wall Street is on edge over the fiscal cliff talks although
investors still expect a deal. The S&P 500 stock index slipped
0.76 percent on Wednesday.
Business leaders have descended on Washington to lobby for a
deal to avoid going over the cliff while putting public finances
on a more sustainable path. Without an agreement to narrow
deficits over the long run, the United States could eventually
lose investors' trust, triggering a debt crisis.
An acrimonious presidential campaign that culminated in
Obama's re-election on Nov. 6 has added to the bad blood in
Washington between Obama and congressional Republicans.
The two sides also clashed bitterly last year over the
government's limit on borrowing - known as the debt ceiling - an
episode that nearly led the nation to default on its debt.
On Wednesday, Obama said the fiscal cliff must not get
bogged down with negotiations over the debt ceiling, an issue
that must be dealt with again early next year.
But Boehner's offer to raise the debt ceiling enough for
another year of borrowing is facing opposition from a large
group of Republicans, a House Republican aide said.
LITMUS TEST
Obama and Boehner appeared to have bridged their biggest
ideological differences but remain hung up on the mix of tax
hikes and spending cuts meant to narrow the budget gap.
"What separates us is probably a few hundred billion
dollars," Obama said.
The White House wants taxes to rise on household incomes
above $400,000 a year, a concession from Obama's opening
proposal for a $250,000 income threshold.
Senior administration officials described negotiations as at
a standstill and Obama warned he would ask everyone involved in
the talks, "what it is that's holding it up?"
Still, the top Republican in the Senate said a resolution to
the stalemate could come by the end of the week.
"There's still enough time for us to finish all of our work
before this weekend, if we're all willing to stay late and work
hard," said Senate Republican leader Mitch McConnell.
Obama had his own problems with Democrats, many of whom
dislike the president's offer to reduce benefits to seniors,
although some political allies of Obama have given signs they
feel they could swallow this concession.
"I don't like these particular changes," said Democratic
Representative Chris Van Hollen, a member of the House
leadership from Maryland. But he added: "What people are seeing
is the president willing to compromise in order to get things
done."