Obama tax deal: why estate tax is the new sticking point

An $858 billion package to cut taxes and help the long-term unemployed was unexpectedly pulled from the House Thursday, suggesting that Democratic leaders underestimated the depth of opposition to the bill as well as the possibility that House members could amend it.

The development means Democratic leadership will have to work behind the scenes to shore up support for the package before bringing it back to the floor – a process that could take anywhere for a few hours to a few days, if possible.

Speaker Nancy Pelosi is faced with a delicate balancing act: President Obama has asked her to rally the House to pass the tax deal that satisfies neither party, and to pass it without changes. The Senate has already passed the deal he struck with Republican leaders, and Senate minority leader Mitch McConnell has said Senate Republicans will not accept any House amendments to the bill.

Seeking to navigate that difficult path, the House Rules Committee laid out strict rules for House debate on the tax deal Thursday: Only one amendment would be considered – to the estate tax portion of the deal.

But objections to these rules for debate from within Democratic ranks proved stronger than majority leaders had expected. One conservative Democrat, Rep. Gene Taylor (D) of Mississippi, went so far as to try to force the House to adjourn for 15 minutes – a move that is often used only when frustration reaches a breaking point.

Moreover, it appeared as if the amendment – which would have made the Senate bill's estate-tax exemptions stricter – might have passed. The amendment was seen as a way to let lawmakers vent anger about the bill without actually passing.

“That’s how you prevent a deal from being undone in Congress,” says Julian Zelizer, a congressional historian at Princeton University in New Jersey.

“Speaker Pelosi is obviously deeply disappointed with this bill, which gives up on one of the Democrats’ major promises in 2008 to oppose tax breaks for the wealthy, but there’s almost no wiggle room in this deal between Republicans and the president,” he adds. “By limiting amendments, the Speaker is bowing to the president.”

Democrats in revolt

By revolting against the terms for debate, however, House members were not bowing to her.

“It has been some time that so many have been asked to do so much for so few – and for no legitimate reason, I might add,” said Rep. Stephen Lynch (D) of Massachusetts, a liberal. “What this bill represents is a complete surrender of Democratic principles in standing up for working people and making them carry an undue burden under this new tax law."

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