With less than two weeks until the Bush tax cuts are scheduled to expire, Democrats on Thursday pulled from the House floor the package negotiated between President Obama and Senate Republicans to temporarily extend current tax rates, while also extending unemployment benefits for 13 months. Despite the delay, a vote on the measure is expected late Thursday.
While Democrats had been reasonably confident Wednesday night that protests over the bill from their liberal wing could be overcome, House leaders stumbled going into a procedural vote to set the parameters of the tax-cut debate Thursday as it became unclear if they had the votes to pass that measure.
The bill moved swiftly through the Senate Wednesday, passing on a vote of 81 to 19. But progressive Democrats in the House remained defiant over what they said were unnecessary giveaways from the president to Republicans in the negotiating process, including extending income tax rates for high earners and setting the estate tax at 35 percent for estates' valued over $5 million.
As a result, the House Rules Committee agreed Wednesday night that the House would take up an amendment to modify the estate-tax piece of the package before the chamber voted on final passage of the overall tax-cut compromise Thursday afternoon.
The amendment, offered by Rep. Earl Pomeroy (D-N.D.), would set the estate tax at 45 percent, with an exemption of $3.5 million, just as the House voted to do in 2009. Pomeroy estimated that the change would affect 6,600 estates in 2011 and would cut $23 billion from the cost of the roughly $900 billion package over two years.
Republicans at the Rules Committee hearing Wednesday argued that the $3.5 million threshold would still subject family farms and businesses to liquidation if the owner dies and his or her children cannot pay the taxes on the estate.
A senior House Democratic aide tells Politics Daily said that "a loud handful of members" did not want to be forced to vote for the underlying legislation -- the Senate-passed bill -- in order to vote for the Pomeroy amendment, as the Rules Committee outlined. "Those members are very angry and would be willing to have this go into January or February," the aide said, describing a scenario senior Democrats and the White House want to avoid.
House Democratic leaders regrouped Thursday afternoon to devise a process that liberal Democrats could support and allow the to pass bill this week, with or without the Pomeroy amendment. To that end, House Speaker Nancy Pelosi huddled with fellow Democrats Thursday afternoon, first on the House floor and then in a hastily scheduled caucus meeting, to find a way forward for the legislation.
After the caucus meeting, which Rep. Louise Slaughter called "raucus," the House resumed debate on the bill and the Pomeroy amendment just before 6:00 Thursday night.
If the House does approve changes to the Senate-passed bill, it could threaten the future of the entire package. Congressional rules call for the amended bill to go back to the Senate for approval, where Republican senators have already said they are not interested in renegotiating the deal they struck with the president.
Senate Minority Leader Mitch McConnell warned Wednesday that any changed to the package in the House could unravel the deal entirely.
"Now it's up to our colleagues in the House, and we urge Democrat leaders to resist playing political games and making partisan changes so that American taxpayers won't be hit with a huge, job-killing tax hike on January 1," McConnell said.
But angering Republican senators is a risk Pomeroy said he was willing to take.
"Would they have taxes go up on everyone just because they want to take care of that wealthy, that little estate-tax exclusion exposure for the wealthiest 6,600 families in this country?" Pomeroy said Wednesday in an interview with PBS's "NewsHour." "We think that we improve the package by making the amendment in order and approved."
Speaking from the White House Wednesday, the president urged lawmakers not to delay the bill any further.
"I know there are different aspects of this plan to which members of Congress on both sides of the aisle object," he said. "That's the nature of compromise. But we worked hard to negotiate an agreement that's a win for middle-class families and a win for our economy, and we can't afford to let it fall victim to either delay or defeat."