Showdown: Will House Democrats Force Changes on Tax Deal?

Posted: Dec 14, 2010 9:23 AM
As millions of Americans commuted home last night, the Senate voted overwhelmingly to invoke cloture on the White House/GOP tax compromise.  The final tally: 83-15.  As I said, overwhelming.  The only five GOP 'no' votes came from Senators DeMint, Coburn, Sessions, Voinovich (!), and Ensign--who might already be feeling some primary heat out in Nevada.  This massive margin all but guarantees easy passage for the bill itself later today; but could House Democrats spoil the bipartisan fiesta by forcing at least one major change to the precariously balanced deal?  Yes, they can.  Or at least, they might:

House Democratic efforts to change the tax deal struck by President Obama and congressional Republicans are focusing on an amendment to the estate tax provision, according to senior party sources familiar with a Monday leadership meeting.

The House estate tax proposal, originally written by Rep. Earl Pomeroy (D-N.D.), would apply a 45 percent levy to wealth over $3.5 million. It was adopted 225-220. The president and congressional Republicans agreed to a rate of 35 percent for the next two years, with an exemption for the first $5 million.

The Senate bill would decrease expected federal revenue by more than $60 billion through the end of 2013, according to the Joint Committee on Taxation, allowing House Democrats to argue against it both on the grounds that it's too generous to the wealthy and that it would add to the nation's debt.

If Pelosi & Co. execute this power play, the entire accord could unravel.  Republicans would (and should) pull the ripcord at that point, putting the legislation's survival in severe jeopardy.  The move would also be a sign of open defiance of the White House, whose chief emissary vice chief emissary on the matter famously told Congressional Democrats that changes to the deal would be untenable, demanding that they "take it or leave it."  "Tweak it" was not on the menu.  As I've been predicting for days, odds are that House Democrats will fold, but they're certainly making things entertaining and giving the White House plenty of heartburn.