Watch CBSN Live

House Dems Struggle with Tax Cut Bill

Capitol dome Capitol building washington congress senate house taxes tax cut tax cuts CBS/AP

House Democratic leadership scrambled today to strike a careful balance between allowing members of their caucus to have their say on tax cut provisions they oppose without bringing down the deal President Obama struck with Republicans to extend all Bush-era tax cuts for two years. That deal overwhelmingly passed the Senate today by a vote of 81 to 19.

All eyes are now on the House Rules Committee which is meeting this afternoon to determine which amendments or changes will be considered and the House is expected to bring the package to the House floor tomorrow. The question is whether they will structure the rule in such a way that allows members to vote against their least favorite positions, but not in such a way that those provisions actually pass.

The first priority for many Democrats who want to alter the bill is changing the estate tax provision in the bill. The president agreed to a request from Sen. Jon Kyl (R-Ariz.) that would allow estates worth up to $10 million to be exempt from paying any taxes at all with estates worth more taxed at just 35 percent.

House Democrats passed a bill a year ago that would exempt estates only up to $3.5 million and taxing them after that at 45 percent and they are fighting to insert that language into this bill. Rep. Chris Van Hollen (D-Md.) is leading the effort to change the Senate provision. He calls it "egregious" and says that it won't create jobs and adds "15 billion dollars to the deficit and benefits just 6,600 families a year." Rep. Earl Pomeroy (D-N.D.), who offered the amendment, says he think it will get a vote.

But now Democrats also want to change other items that were supposed to be sweeteners for Democrats like the 13 month extension of unemployment benefits and the two-year payroll tax holiday that cuts everyone's social security taxes by 2 percent.

On unemployment insurance, Rep. Elijah Cummings (D-Md.) says that it should be extended from 13 months to two years so that it is not seen as less important than the two-year extension of tax cuts for the wealthy. He admitted last night after talking with the president over the phone that it's a delicate balance.

"Right now it's a question of how much can be changed without ruining the president's efforts to get this thing through" Cummings said.

On the payroll tax holiday, members like Rep. Lloyd Doggett (D-Texas) argue that the one-year payroll tax holiday would force the government to borrow money to make up for the losses in the Social Security Trust Fund, that the tax cut would likely never expire and that it would jeopardize Social Security's solvency.

"I plan to present an amendment asking that the payroll tax provision is stricken from the bill" Doggett said.

If any of the amendments or changes pass the House, the bill would have to pass the Senate again and its passage could be in doubt just over two-weeks from all the Bush tax cuts for the wealthy and the middle class expiring.

While the loudest Democrats oppose many of the provisions in the Senate-passed bill, there is support for the measure among fiscally conservative Blue Dog Democrats. Thirty-one House Democrats sent a letter to Speaker Nancy Pelosi last night asking her to quickly schedule a vote, put aside partisan differences, and "act to send it directly to the president's desk without delay."

If those members vote against changing the tax bill, along with most Republicans, it will be very difficult for House Democrats to change the bill.

At Left: The Hill newspaper's managing editor Bob Cusack discusses Capitol Hill's top headlines on "Washington Unplugged."

Opposition among Republicans also mounted today, with Rep. Mike Pence (R-Ind.) heading to the House floor first thing to announce his opposition to the package. His objection? That unemployment insurance provisions are unpaid for and that the tax cuts are not permanent so they will not help businesses plan.

"Uncertainty is the enemy of our prosperity" Pence said. "Frankly, we can provide assistance to people struggling in this economy by making the hard choices to pay for it without adding to the national deficit."

Tax Cut Deal Divides Potential 2012 GOP Contenders

Rep. Steve King (R-Iowa), a Tea Party favorite, said he is leaning no on the bill and wants the tax cuts to be permanent. But his main objection is that incoming members elected last month don't get to vote on the measure after running on keeping taxes low and cutting the deficit.

"Their voice should be heard," King said. He also argued that Democrats could have taken this up before the election, but that they "didn't want to be accountable for the voters by putting something up before the election."

Republican aides were confident Thursday though that a strong majority of their members would vote for the package if it is not changed in any way.

Jill Jackson is a CBS News Capitol Hill Producer. You can read more of her posts in Hotsheet here. You can also follow her on Twitter.