House passes temporary extension of Bush-era tax cuts, 277-148

The House gave final approval late on Thursday night to a temporary extension of the George W. Bush-era tax rates, delivering a significant but politically bruising victory to President Obama.

The $858 billion legislation now heads to the president’s desk for his signature. It extends the Bush tax cuts across the board for two years, slashes the employee payroll tax by 2 percent for one year, renews the estate tax and extends unemployment insurance benefits for 13 months.

The vote was 277-148, and the bill gained a majority of both Democrats and Republicans despite complaints from each party’s political base. The legislation deepened divisions in the Democratic ranks and burst open festering tensions between House Democrats and the White House.

Speaker Nancy Pelosi (D-Calif.), who had herded her divided caucus through the contentious process, said afterward she was pleased with the outcome despite her reservations about the bill.

Asked whether the emotional tax-cut vote had damaged the morale of the Democrats as the 111th Congress evolves into the 112th, Pelosi downplayed any lingering rancor.

"They're glad this is behind us, and they're ready to go forward," Pelosi told The Hill after the vote. "They're ready for the fight."

In the end, only one member of the House Democratic leadership, Majority Leader Steny Hoyer (D-Md.), supported the final bill. Pelosi did not vote, and Reps. James Clyburn (D-S.C.), John Larson (D-Conn.), Chris Van Hollen (D-Md.) and Xavier Becerra (D-Calif.) all opposed the legislation.

During an early-afternoon vote on an unrelated matter, No. 2-ranking GOP Rep. Eric Cantor (Va.) and his Democratic counterpart, Hoyer, huddled in the back of the chamber.

According to a staffer familiar with the five-minute confab, Cantor asked Hoyer if the Democratic leader needed GOP votes to support the procedural vote on a rule governing debate of the tax package. Even though Democrats pulled the rule vote because they feared losing that effort, Hoyer declined Cantor’s help.

The outreach by Republicans was one of the ways in which GOP leaders ramped up their whip effort while their Democratic counterparts appeared to implode as a caucus.

In all, 112 Democrats and 36 Republicans voted against the deal, including conservative stalwarts Mike Pence (R-Ind.), Michele Bachmann (R-Minn.), Steve King (R-Iowa) and Jim Jordan (R-Ohio).

Citing jobless benefits not paid for and an extension of the tax cuts set to expire in two years, during the next political season, those members felt they could get a better deal out of President Obama after they take power in a little under three weeks.

But Cantor and Chief Deputy Whip Kevin McCarthy (R-Calif.) made a dogged effort to rally support for the negotiated package that would ensure “certainty” in the near future.

Minutes before the final vote, the House turned aside a Democratic amendment to raise the estate tax provision in the bill. Incorporating that change would have sent the bill back to the Senate and faced certain Republican opposition there.

The president argued the deal was the best he could get from Republicans who refused to budge on extending tax cuts for the highest-earning Americans, which Democrats wanted to end. The action by Congress prevents a broad tax increase from taking effect when the current rates expire at the end of the year.

The last votes Thursday capped a fractious three-week debate after Obama abandoned his Democratic allies in the House to cut a deal with Senate Republicans. House Democrats revolted over the pact, decrying the president for capitulating on one of his party’s signature domestic priorities: ending the Bush tax cuts for the wealthiest Americans.

“This basically concedes the argument to the supply-side Republican failed economic policies,” Rep. Peter DeFazio (D-Ore.) said.

Other Democrats denounced the bill for exploding an already soaring federal budget deficit. “Wake up and listen to the sirens,” Rep. Sam Farr (D-Calif.) said on the House floor. “I can’t believe you talk about this bill as fiscal sanity. It’s fiscal insanity.”

The House Democratic Caucus held a non-binding vote to reject the Obama-GOP deal a week ago, but within days the Senate overwhelmingly approved the bill and Pelosi moved ahead with a vote.

House liberals made one last stand on Thursday, forcing the Speaker to pull the tax bill from the floor for several hours because of objections to the amendment process.

While the Democratic leadership decided to allow one attempt to amend the Republican-favored estate tax provision in the Senate-passed bill, liberals complained that the procedure party leaders crafted would not have allowed them to register their objections directly on the legislation.

“The original rule did not allow members to have a clean up-or-down vote on the bill,” Rep. Peter Welch (D-Vt.) said.

After a huddle with members on the House floor and a hastily scheduled meeting in her office, Pelosi agreed to rework the process, allowing separate votes on the estate tax amendment and the underlying legislation.

Pelosi herself did not lobby members on the tax bill, leaving the White House to rally support for a deal it alone had negotiated with Republicans. Vice President Biden delivered a personal pitch to House Democrats, and Obama called lawmakers himself in the days leading up to the vote.

And while lawmakers predicted the Senate bill would pass once it came to a vote in the House, the Obama administration was concerned enough to whip votes against the estate tax amendment in the final hours, a House leadership aide said, not wanting a last-minute change to send the legislation back to the Senate and unravel the accord.

House Republicans broadly backed the measure, some of them reluctantly. Like many other GOP lawmakers, Rep. Jeb Hensarling (R-Texas) said he wanted to see the tax rates extended permanently, but his top priority was preventing a tax hike on Jan. 1. “In this legislation I see the glass half-full,” he said on the floor. He acknowledged conservatives who said the GOP could have held out for a better deal. But he concluded: “Personally I am not willing to take a chance. I am going cast the aye vote. I am going to stop the job-killing tax increases.”

In a floor speech Thursday night, Pelosi endorsed the estate tax amendment but pointedly refused to explicitly back the underlying bill. The GOP-favored inheritance tax of 35 percent for individuals worth more than $5 million, the Speaker said, “is not good policy. It does have not have a favorable impact on the deficit. It does not create jobs. It does not grow the economy.”

As to the overhaul compromise, Pelosi said, “Members will have to make their own decisions.

“I applaud President Obama for his side of the ledger,” Pelosi said. “I’m sorry the price that had to be paid for it is so high.”

— Molly K. Hooper and Michael M. Gleeson contributed reporting.

This story was updated at 12:50 a.m.