The tax deal passed overwhelmingly by the Senate yesterday appears to have stalled in the House, due to Democrat demands for further revisions. Among the provisions they seek to attach is a further increase in the estate tax, already scheduled to rise to 35% under the deal between President Obama and the Republicans.
The severity of this roadblock has been described as “serious” to “insurmountable” by observers in early news reports. Speaker Nancy Pelosi is reportedly working on a way to bring her caucus together behind the bill, as the clock runs out on the 111th Congress.
Update: More details of the “roadblock” have come into focus. It seems the procedural hurdle was an amendment that would have altered the estate tax rates. If this version of the bill had passed, the entire bill would have been “deemed” to have passed, whacking it over the congressional volleyball net back into the Senate. This legislative device became controversial during the final days of the ObamaCare debate.
The left wing of the Democrat caucus insists on the opportunity to vote separately on both the estate tax changes, and the entire bill. Senate Republicans insist nothing should be changed. House Speaker Pelosi therefore had to pull the whole thing off the floor for retooling. The legislative pit crew keeps smiling through the grease on their faces and giving “thumbs up” signs when asked if she’ll be ready to roll again today, although others are less sanguine.
Many Republicans were less than thrilled with the current form of the bill, which rolled out of the Senate covered with fresh deals for various interests, and a foul ethanol smell pouring out of the tailpipe. Since President Obama has supposedly been telling Democrats his presidency depends on getting this thing passed, some think it might be better to let it blow up in the pit, hose down the wreckage with fire extinguishers, and trust the incoming House to work out a better deal. If the House progressive caucus kills it, there would be no way to spin out of their responsibility for the resulting rise in across-the-board tax rates, coupled with the loss of an extension to unemployment benefits.
On the other hand, there is still a Democrat majority in the Senate, and they have the White House. I can imagine what they’ll say about the idea of retroactive “tax cuts for the wealthiest Americans” from the freshman Congress.
I was inclined to think the original agreement between Obama and the Republicans was flawed, but the best deal we were likely to get. Preserving all the Bush tax rates was important, provided the new Congress continued the work with further tax and spending reductions. The unemployment extensions were unwise deficit spending, but it’s tough to talk about ending benefits during the holidays.
I was much less enamored of the mutated version of the deal that crawled out of the Senate, and thought the Republicans should have walked away from it then. Now it would be politically best if the Democrat far-left killed the deal, and I hope those who talk of a better plan concocted by the new Republican House are right, but I can’t help worrying about the continuing instability caused by going into the New Year with this business unresolved. A lot of grim decisions will be made by nervous managers and executives during their holiday.