Pelosi pledges to win changes as House Dems reject tax deal

The House Democratic Caucus on Thursday rejected the tax deal negotiated between the White House and Senate Republicans.

The non-binding vote of the caucus held during a closed-door meeting puts tremendous pressure on House leaders to win changes to a proposal the White House has presented as a "take it or leave it" package.

(To see where Democrats fall on the tax compromise, check out The Hill's Whip Count here)

House Speaker Nancy Pelosi (D-Calif.) issued a brief statement after the vote indicating that lower-chamber Democrats will fight to alter the bill. 

"We will continue discussions with the President and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote," Pelosi said.

“Democratic priorities remain clear: to provide a tax cut for working families, to create jobs and economic growth, to assist millions of our fellow Americans who have lost their jobs through no fault of their own, and to do this in a fiscally sound way.”

White House press secretary Robert Gibbs said the president is confident Congress will approve the tax package despite its rejection by House Democrats. “At the end of the day” the bill will pass both houses, Gibbs said at his daily press briefing.

Gibbs challenged Democrats to come up with a better compromise than the one Obama reached with Republicans in an effort to break a “legislative stalemate” that could have disastrous consequences for the economy.

“If everybody took out what they didn't like, we would have nothing,” Gibbs said. “And we know the consequences of doing nothing.”

Democrats have appointed Rep. Chris Van Hollen (D-Md.), the assistant to the Speaker, to represent the caucus in future negotiations on the bill. Van Hollen was a part of the so-called Gang of Six, a short-lived group created last week to crunch a compromise with the White House and congressional leaders from both chambers.

The White House, however, abandoned those talks and focused instead on meetings with Senate Republicans. It is now insisting that the deal worked out with Senate Republicans cannot be changed. 

That position appears to have provoked outrage among House Democrats who are livid that the package would extend all of the tax cuts signed into law by President George W. Bush in 2001 and 2003, including those for the highest income earners. 

Sponsored by Rep. Peter DeFazio (D-Ore.), the resolution says simply that Democrats oppose floor action of the tax deal in its current form. 

"We have tremendous concerns about what was given away by the White House," DeFazio told reporters in the Capitol basement after the vote. 

DeFazio said the voice vote was "virtually unanimous," with only one or two members expressing dissent. 

"We have given our leadership license to force the Senate and the White House back to the table to get a better deal for the American people," he said.

Asked if leadership had agreed to do that, DeFazio replied, "Well, they're not going to get a bill if they don't."

DeFazio said he spoke to the Speaker prior to the vote and that she "did not express any opposition to what we proposed." DeFazio said the next step is for leaders to "go back to the bargaining table — and this time, they don't have a side-bargain between Joe Biden and Mitch McConnell," the GOP leader in the Senate.

President Obama on Monday stirred a firestorm when he announced a deal to extend the Bush-era tax cuts for all income levels. House Democrats passed an alternative bill last Thursday extending those cuts only to individuals earning less than $200,000 and families earning less than $250,000 annually. Both sets of tax cuts are set to expire at the end of the year. The deal also includes a 13-month extension of unemployment benefits.

Democrats are as angry about how the deal was put together as they are about its substance — they see the White House as abandoning bipartisan talks with Republicans and Democrats to work out a deal just with Senate Republicans. Vice President Joe Biden visited Capitol Hill on Wednesday to deliver the message to House Democrats that the White House viewed the deal as a "take-it-or-leave-it" accord.

In the lead-up to the vote on the DeFazio resolution, supporters could be heard from the hallway chanting, "Just say no!"

"There came a point where clearly they decided to cut a deal with the Republicans," Van Hollen said Tuesday.

DeFazio had another take on that episode: "We had a representative in the room bargaining, while the deal was being cut somewhere else."

"[Biden] basically said, 'Take it or leave it,' " DeFazio said. "We left it. It's up to them."

The White House has been aggressively pushing the deal all week, arguing Democrats risk plunging the country into a double-dip recession by rejecting it. At a testy news conference this week, Obama defended his negotiating stance, saying Republicans were not going to budge on their insistence that all of the tax cuts be extended. The president compared the GOP to hostage takers and said he had to act in order to help middle-class taxpayers and the unemployed. 

DeFazio had intended to bring up his resolution next Tuesday, but news reports indicating the Senate is leaning toward accepting the deal caused him to expedite the timeline, DeFazio said. Fifty-five Democrats had signed a petition to force a vote on the resolution.

Some Democratic leaders remain reluctant to attack the White House-GOP deal directly. In very cautious comments to reporters after the vote, Rep. Xavier Becerra (D-Calif.) punted on questions about where he stands on the current proposal.

"The president said he would fight for the middle class," he said. "I'm with him on that."

With the lame-duck session quickly coming to a close, Congress is running out of time to finalize a deal on the tax-cut extensions. Asked if the short window threatened the House Democrats' push to return to the bargaining table, DeFazio suggested the lower-chamber remain in Washington this weekend to hash out a deal. 

"I don't think there's an imperative the House go anywhere," he said. 

The chairman of the caucus, Rep. John Larson (D-Conn.), downplayed the notion of the move being a purposeful rebuke of the Obama administration, as other Democrats had characterized it. 

“We have a great relationship with the White House. I want to underscore that,” he said. “We stand solidly behind the president.”

But he said House Democrats wanted to put “our own imprimatur” on the tax-cut proposal. 

Not all Democrats were on board with the resolution. Some said they want a chance to vote on the White House deal. 

"A clear majority of the U.S. House of Representatives supports this plan," Rep. Dan Boren (D-Okla.) said in a statement. "We are allowing the liberal wing of the Democratic Caucus to hold these critically needed tax cuts hostage."

Republicans, who will be running the House next year, have few options to force a vote. There is not enough time to launch a discharge petition, which would allow for a roll call if it collected 218 signatures.

Under House rules, there is a waiting period before a measure can be called up via discharge petition, House parliamentary experts explained. That waiting period prevents a discharge petition from being a viable strategic move.

Regardless, many House Republicans believe the Democrats will blink. 

A senior GOP lawmaker said House Democrats were just "blowing off steam" in their caucus vote on Thursday.

If Democrats attempt to change the estate tax provisions, Republicans say they may reject such a revised proposal.

Asked if tinkering with the estate tax provisions would be a deal breaker, Incoming Education and Labor Committee Chairman John Kline (R-Minn.) responded that "it could be close to it."

Rep. Jeff Flake (R-Ariz.) has announced he would vote against the plan that includes an extension of unemployment benefits that are not paid for.

A spokesman for Minority Whip Eric Cantor said the Virginia lawmaker has not taken a whip count of Republicans because legislative language has not yet been introduced.

For the most part, House Republicans are supportive of the compromise, according to Rep. Gregg Harper (R-Miss.).

Rep. Mike Rogers (R-Mich.) said the new GOP majority may have to pass the deal early next year. 

"If we're going to cut a deal, and they're going to re-cut a deal, at some point you have to say, 'Maybe we have to deal with this next year,'" Rogers said. The Michigan legislator stressed his preference to pass the package this month.

Sam Youngman and Molly K. Hooper contributed to this story.

This story was posted at 11:45 a.m. and last updated at 5:20 p.m.