WASHINGTON (MarketWatch) — House Democrats voted Thursday to block a deal struck by President Barack Obama and congressional Republicans on extending Bush-era tax breaks from coming to the floor until changes are made to the compromise.
Democrats are upset that the agreement Obama struck is too generous to the wealthy since it extends income-tax rates for the top two tiers, and brings back the estate tax at 35% with a $5 million exemption.
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The vote, in a Democrat-only caucus meeting, isn’t binding but underscores the difficulty the White House is having selling the deal to rank-and-file Democrats.
“In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written,” said Speaker of the House Nancy Pelosi in a statement.
“We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.”
The White House predicted that a bill would ultimately pass.
“This is a long and winding process,” White House press secretary Robert Gibbs told reporters. “But I think at the end of the day, members are not going to want to be in their districts, senators are not going to want to be in their districts when their constituents find out on the first of January that their taxes have gone up by several thousand dollars.”
The Senate may begin debating the proposal as soon as Thursday. Senate Majority Leader Harry Reid, a Nevada Democrat, said he wants to make sure lawmakers have ample time to read the legislation but didn’t promise a vote time.
“As far as future votes, stay tuned,” Reid said on the Senate floor.
Lawmakers don’t have much time to act to prevent tax rates going up on most taxpayers next year. Unless Congress passes an extension of the Bush-era tax cuts, they will expire on Dec. 31.
