To appease liberals, House will vote on change to estate-tax provision in bill

The House is set to vote Thursday on President Obama’s tax proposal after first giving liberal Democrats one last chance to force a change to the Senate-passed agreement.
 
The key question is whether the House will send the bill back to the Senate or to the White House for the president’s signature.
 

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Under procedures approved Wednesday evening by the House Rules Committee, the lower chamber will vote first on a proposed change to the estate-tax provision of the deal Obama reached with Republicans.
 
The change, offered by Rep. Earl Pomeroy (D-N.D.), would renew the 2009 inheritance tax at 45 percent for individuals with estates worth more than $3.5 million, a level identical to the rate passed by the House last year. The bill passed by the Senate on Wednesday sets the estate tax at 35 percent for individuals with an exemption beginning at $5 million.
 
After dispensing with a series of non-controversial bills, the House is expected to begin action on the tax bill in the afternoon, aides said. Lawmakers will first approve procedures for the vote and then have three hours of debate before the crucial votes, which are expected in the early evening, between 5 p.m. and 7 p.m.
 
If the estate tax change passes, the tax bill would return to the Senate, setting up a showdown with Republicans who have vowed to oppose alterations to the grand compromise over Bush-era tax cuts and unemployment benefits.
 
Democratic leaders have assailed the GOP-favored estate-tax provision as a needless gift to the wealthy, calling it the most egregious part of the Obama proposal. Rep. Chris Van Hollen (D-Md.), the House Democrats’ chief negotiator on the tax deal, said Wednesday the lower estate tax rate would add $23 billion to the deficit while benefiting just 6,600 American families.
 
House leadership aides said privately they doubted the Pomeroy proposal would pass, given the pledges by Republicans and Blue Dog Democrats to oppose the change. If the amendment fails, the House would vote on the Senate-passed bill, which is expected to pass.
 
Liberal Democrats remain furious about the deal Obama struck, which calls for a two-year extension of current tax rates, a 2 percent payroll tax cut and a 13-month extension of unemployment benefits, among other provisions. Yet they have said in recent days they are resigned to the bill’s passage.

However, Rep. Peter Welch (D-Vt.), among the most vocal critics of the Senate-passed bill, said Thursday that House leaders are not twisting the arms of rank-and-file members to support it. In fact, opponents of the measure will be given 45 minutes to make their case during Thursday's debate on the House floor.

Rep. Jesse Jackson Jr. (D-Ill.) noted Thursday that both the Senate bill and the alternative containing the Pomeroy amendment will increase deficit spending, exacerbating budget troubles that could eventually erode social programs.

Jackson said he'll vote against both measures.

"We'll put up the strongest fight that we can," Jackson said.

Still, with the White House and Senate Republicans insisting the bill remain unchanged, even some of the most vocal House critics are conceding the proposal will likely pass the lower chamber as is.

"I'm not sure the president cares much what the House members do," said Rep. Brad Sherman (D-Calif.).

Asked why House Democrats aren't fighting harder, Rep. Jerrold Nadler (D-N.Y.) said members "got persuaded that we had no choice."

Some liberals had launched an unsuccessful effort this week to vote also on an amendment scrapping the one-year payroll tax reduction included in the Senate bill. That provision, the critics said, will steal funding from Social Security, eventually threatening seniors' benefits under the 75-year-old program.

Supporters of that measure — including Welch and Rep. Rush Holt (D-N.J.) — said Thursday they didn't know why leadership didn't allow a floor vote on their proposal. Welch, though, had a theory about why Senate Republicans, behind Minority Leader Mitch McConnell (R-Ky.), would reject it.

"Mr. McConnell is not being shy about it," Welch said. "He's said, 'We're going to starve the beast.'"
 
While House Democratic leaders have not pressured their members on the legislation, Obama has been calling rank-and-file lawmakers to argue for passage. A leading critic, Rep. Peter DeFazio (D-Ore.), said Wednesday on CNN that Obama has been telling lawmakers it would be “the end of his presidency” if the bill fails. The White House has dismissed that claim.

"The president hasn’t said anything remotely like that and has never spoken with Mr. DeFazio about the issue," said White House spokesman Tommy Vietor late Wednesday.
 
Speaker Nancy Pelosi (D-Calif.) said she would “love to see” the House substitute a higher estate tax, but she did not say whether the amendment would be approved.
 
At a lively Rules Committee meeting Wednesday, the debate over the estate tax turned into a broader ideological battle between Democrats and Republicans over government priorities. Rep. Kevin Brady (R-Texas) said the “death tax” was immoral, while Van Hollen quoted Theodore Roosevelt’s argument that the estate tax was designed to ward off a “permanent American aristocracy.”
 
The Rules Committee ultimately rejected several other proposed amendments to the tax bill, including the measure to eliminate the one-year payroll tax holiday from the bill. 
 
Rep. Mike Pence (R-Ind.) pushed for a floor vote on a permanent extension of the Bush-era tax rates but that, too, was turned aside.

— Sam Youngman and Mike Lillis contributed to this article.

— This article was originally posted at 7:52 p.m. Wednesday and updated at 11:11 a.m. and 12:11 p.m. Thursday.