Tax Cut Debate Stalls as Package Hits House Hurdle

Published December 16, 2010 FoxNews.com

The massive tax cut package that passed the Senate Wednesday has screeched to a halt in the House as representatives squabble over procedural complaints.


The House was originally expected to debate and vote on the tax cut package as early as Thursday afternoon, albeit with some potential changes. The plan was to first hold a vote on an alternative proposal that would raise the estate tax above what Republicans want. If that failed, the House was scheduled to vote instead on the Senate-passed bill.

But before any of that could happen, the so-called "rule" -- the legislative device that has to be approved before a bill can come to the floor -- was pulled. The House has since gone into recess.

A senior House aide told Fox News that the House Rules Committee will try to rework the language in hopes of salvaging a vote on the package Thursday.

"We can't go anywhere anyway -- it's snowing," the aide said.

Rules Committee Chairwoman Rep. Louise Slaughter, D-N.Y., said "just about everybody" had a problem with the rule, which would have allowed for a vote on the estate-tax alternative. The primary complaint was that members were concerned that if the alternative bill passed, they would not be able to cast a vote on the Senate version -- they wanted to be able to vote on both packages no matter what.

In addition, Rep. Peter DeFazio, D-Ore., said Democrats are pushing for more changes to the bill, including an extension of the income tax credit from the 2009 stimulus law.

As a result, the tax cut package is stuck in limbo as the procedural wonks figure out what to do next.

The dispute appears to have slowed the bill's momentum after the Senate overwhelmingly passed the $858 billion package of tax breaks and unemployment aid on Wednesday.

After the Senate vote Wednesday, President Obama declared himself still opposed to portions of the legislation because it keeps in place big tax benefits for the wealthy. Nevertheless, he said, compromise was necessary.

"I know that not every member of Congress likes every piece of this bill, and it includes some provisions that I oppose. But as a whole, this package will grow our economy, create jobs, and help middle class families across the country," Obama said in a statement.

In return for keeping in place tax cuts for all income levels, Obama had won a Republican pledge to vote for a 13-month extension of jobless benefits for the long-term unemployed. The deal also includes a 2 percent reduction in payroll taxes that fund Social Security, the federal pension system for the retired and disabled.

Most Democrats, along with Obama, opposed keeping tax cuts in place for households earning more than $250,000 a year. But Republicans threatened to scuttle a continuation of tax breaks for those who earn less than that amount without continued breaks for the wealthy.

The part of the Senate-passed legislation liberal House Democrats find most upsetting involves the inheritance taxes. Under the compromise negotiated between Obama and congressional Republicans, the portion of estates above $5 million would be subject to a 35 percent tax rate.

House Democrats want the taxation threshold lowered to $3.5 million, and the top rate increased to 45 percent. That's the alternative plan they were expected to vote on Thursday.

If the House passes that plan, the bill would have to return to the Senate -- both chambers must pass identical versions of the package. However, if the House rejects the alternative plan and subsequently approves the Senate-passed plan instead, then the package goes straight to Obama's desk for his signature.

Despite House Democrats' displeasure with the law, it was widely expected to pass because few lawmakers in either party are keen to have cast a vote that could significantly raise taxes on the middle class. That's presuming the House can get past the "rules" phase.

But passions still were running high in the House, where debate will be heated.

"Let's find out if Republicans really want to jeopardize income tax, payroll tax and estate tax relief for every American in order to provide a budget-busting bonanza to the country's richest estates," Rep. Chris Van Hollen, a leader within the Democratic Party, wrote in a Washington Post opinion piece on Wednesday. "House Democrats think this trade-off should be debated and voted on in the light of day."

Even so, said Democratic Rep. Bill Pascrell Jr., "We can jump up and down all we want about the higher-end estate taxes, and I don't think anything's going to change because the Senate isn't going to change it."

Thirty-one members of the conservative Blue Dog Democrats sent a letter to House Speaker Nancy Pelosi urging quick passage of the bill.

"It is time for us to put aside the partisan talking points and accomplish what the American people sent us here to do," said the letter.

Fox News' Chad Pergram and The Associated Press contributed to this report.
http://www.foxnews.com/politics/2010/12/16/tax-cut-debate-stalls-package-hits-house-hurdle/