Democrats to draw line at estate tax after Obama’s deal with Republicans

House Democratic leaders unhappy with the tax-cut deal President Obama struck with Republicans are signaling they will try to draw the line at a GOP-favored proposal for the estate tax.

Speaker Nancy Pelosi (D-Calif.) on Tuesday escalated the Democratic criticism of the agreement and said the estate-tax provision was “a bridge too far.”

The comments by Pelosi and other party leaders reflected widespread anger among House Democrats at the president for caving too early, by their characterization, and essentially leaving them out of final negotiations with Republicans.


While Pelosi retains the Speaker’s gavel for nearly another month, the tax-cut endgame offered a sobering glimpse at life in the House minority, and House Democrats entered a Tuesday night caucus meeting unsure of their leverage in the tax debate.

With Republican support and a few dozen conservative Democrats already on the record supporting a temporary extension of all the Bush-era tax cuts, the deal conceivably could pass without a majority of the House Democratic Caucus. Democrats are most strongly opposed to the extension of tax cuts for the wealthy, but their focus on the estate tax could provide a more realistic opportunity to tweak the proposal.

Pelosi, speaking to reporters for the first time since Obama announced the tentative agreement on Monday, acknowledged there was “unease” within the Democratic ranks about the deal.

“We are listening to what our caucus has to say, but so far, the response has not been very good,” the Speaker said after a leadership meeting in her office.

The Obama-GOP agreement sets the inheritance tax at 35 percent for individuals bequeathing more than $5 million to their heirs. The Democratic-controlled House passed a bill in 2009 that would set the estate tax at 45 percent and start the exemption at $3.5 million. There is no estate tax in 2010.

“We believe the estate tax in the bill is a bridge too far,” the Speaker said. That provision shifts the balance in the agreement to Republicans and “ends any kind of symmetry between the two sides.”

Two other House Democratic leaders — Reps. George Miller (Calif.) and Chris Van Hollen (Md.) — denounced the inheritance provision.

“The estate tax is just gratuitous,” said Miller, a close Pelosi ally.

Van Hollen, the assistant to the Speaker and the House Democratic negotiator on taxes, noted the estate-tax provision would cost $68 billion over the next two years.

“I have very, very serious reservations with this deal,” he said. “I’m certainly not in a position to recommend this to my colleagues, I’ll tell you that.”

Van Hollen warned that the tax package is not final until the lower chamber endorses it.

“The House never signed off on this, so it’s certainly not a done deal,” Van Hollen told The Hill.

The chairwoman of the House Rules Committee, Rep. Louise Slaughter (D-N.Y.), also excoriated the agreement with Republicans.

“I don’t agree with this. I think the president’s wrong,” Slaughter said. “I’m sorry that we couldn’t have held on there for a little while until we all got to talk about it, but obviously he couldn’t.”

As she did in a written statement earlier Tuesday, Pelosi strongly defended the Democratic proposals in Obama’s compromise and denounced the GOP-favored provisions, principally a temporary extension of tax cuts for high earners.

“On the Democratic side, you have stimulus, you have job creation, you have growth for the economy,” Pelosi said. “On the Republican side, you have no creation of jobs and an increase in the deficit. So we have some unease with the proposal.”

Democratic leaders acknowledged they were not involved in the negotiations Obama conducted with Republicans over the weekend. Asked if the House was adequately included in the talks, Majority Leader Steny Hoyer (D-Md.) replied: “I don’t think House Democrats think so.”

Hoyer said earlier Tuesday that the House wants the Senate to act first on the tax-cut proposal. In what amounted to a symbolic vote, the House last week approved an extension of tax cuts only for middle-income Americans, but Senate Democrats were unable to overcome a Republican filibuster. Hoyer defended the House vote, saying the move “wasn’t specious at all.”

“That bill reflected the priorities of the Democratic Caucus,” he said. “That was our priority. We sent that bill to the Senate.”