House Democrats Disarray Puts Tax Deal At Risk

The House of Representatives was supposed to vote on Thursday afternoon on the tax deal negotiated by President Obama and Congressional Republicans.

But, Democrats’ infighting over the estate tax between the leadership and liberal members caused a complete breakdown on the House floor, and left the tax deal left in limbo.

“They wanted to make sure they could vote to raise the death tax, and still vote against stopping the tax hikes scheduled to hit every American on January 1,” said a GOP aide.

Outgoing Speaker of the House Nancy Pelosi (D-Calif.) is forced to carry President Obama’s water and push to pass the tax deal, which keeps taxes from going up for two years. However, her fractioned caucus refuses to follow her.

“The Democratic leadership miscalculated in a major way.  They thought they could expect their Members to just go along, to get along,”said another GOP aide.  “They obviously can’t.”

The Democrats fighting started in their morning internal caucus meeting. Liberals such as Rep. Maxine Waters (D-Calif.) revolted against the procedural motion–  crafted by their own Democrat-controlled Rules Committee.

They wanted a recorded vote to show that they are FOR raising the estate tax (death tax) rate.  Also, they wanted to be on the record showing they are against preventing a tax hike on all Americans.  

So the lame-duck Democrats have held the tax relief act hostage so that they can show that they are for raising taxes on all Americans.

“They are still in denial about the election,” said one GOP aide.

The rule was to have a vote first on the liberal alternative death tax, sponsored by Rep. Earl Pomeroy (D-N.D.). The Pomeroy amendment would raise the death tax rate, which had been agreed to by the President and passed by the Senate.

While Republicans want to permanently repeal the death tax, they could not get that passed in the Democrat-controlled House and Senate (nor signed by Obama). The compromise, which is called the Lincoln/Kyl amendment, exempts from any death tax those individuals whose estates are worth less than $5 million. Estates valued at over $5 million would be taxed at 35%.

The Pomeroy amendment lowers the exemption rate to estates worth over $3.5 million, thereby making more people subject to the death tax. The Democrat alternative also raises the death tax rate to 45%.

Under the Obama/GOP compromise plan, an estimated 3,600 Americans would be hit by the death tax next year. Under the Democrats alternative plan, an estimated 6.460 Americans would get taxed at death. So, the Democrats want 2,860 more taxpayers to get their estates hit with a 45% tax rate when they die.  

The vote fell apart because their rule made it so that if the Pomery amendment had passed, it would substitute in for Lincoln/Kyl and the full tax package would immediately go to the Senate, with the liberal Democrats  appearing to have voted for the tax deal.  

The Democrats want to vote for Pomeroy (raising death tax) but against the tax deal passage (for tax hikes), which was not possible with their rule.

When the Democrats realized that they did not have the votes to pass their rule, they were forced to pull it from the floor. A rule is almost always guaranteed passage, so pulling it from the floor is a rare occurrence that demonstrates weakness in party leadership.

Meanwhile, Senate Minority Leader Mitch McConnell (R-Ky.) has said that if the House Democrats alter the package in any way, he will not let it pass the Senate again.

The Democrats’ disarray was all for symbolic gestures. They did not expect the Pomeroy amendment to pass. When the death tax amendment failed, they would have voted on the tax package from the Senate, which would then go to the President to sign.

The House Democrats scrambled off the floor and scheduled a full meeting of their caucus in the late afternoon. But Pelosi could not get a plan put in place, so she had to postpone facing her own members.

Democrat leaders then spent hours crafting a new rule, which let their members vote FOR raising the death tax (Polmeroy) and then against the tax deal, without the risk of seeming to vote for tax relief (horrors!).

By 7 p.m. on Thursday evening, the Democrats finally returned to the House floor with their new rule. The House was supposed to have a final vote on the the Obama/GOP tax deal by afternoon, but now the earliest vote would be around midnight. 

If the Democrats can’t get their act together in the next 15 days, every Americans will get a tax hike.

“This is the perfect ending to the 111th Congress – complete and total chaos,” said an exasperated Republican aide.