WASHINGTON -- In a raucus caucus meeting on Thursday, House Democrats rejected the tax deal President Obama negotiated with Republicans, meaning that House Speaker Nancy Pelosi will not bring the package to the floor as it is.
However, House members and the Obama team anticipate the package -- with some changes -- to pass because Republicans are expected to add votes to take the place of every defecting Democrat. Republicans will have to put votes up to show it is a true compromise.
One possible sweetner for Democrats who say Obama caved to Republicans: The Sun-Times has learned a green renewable energy jobs tax credit may be added to the package.
"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," Pelosi said in a statement after the non-binding voice vote behind closed doors.
"I think at the end of the day, this will get done," White House Press Secretary Robert Gibbs said at the Thursday briefing. The White House has been rallying support by gathering endorsements for the tax package from mayors and governors -- hoping to sway members who actually have the vote.
The Democratic caucus was officially an organizational session for the new Congress to be seated in January, when Republicans take over control. The sixty or so House members who lost but are serving out the remainder of their terms in the lame-duck session were not invited to attend. Which means the voices of supporters of the package, such as Rep. Melissa Bean (D-Ill.), were not heard.
At issue is House Democratic ire at Obama -- especially from progressives -- at the deal because it sets a $5 million estate tax exemption at a maximum 35 percent rate for two years, as well as extension for two years of Bush-era tax cuts for all income earners. Obama in return got a 13-week extension of unemployment benefits and a small cut in payroll taxes for a year.
The meeting got quite heated, a "little crazy," I am told by a member who attended as Democrats -- who are coming to grips with losing power, chanted "just say no."
"We are struggling to find ourselves and to find our voice. We don't like this deal. The question is, how do you stop it? I've been around a long time; this is going to pass. But it was one raucus meeting," the member told me.
While all the details on how to proceed have not been worked out, as of Thursday night it looked like the Senate could vote on a tax bill as early as this weekend, though Monday is more likely. As for waiting for House Democrats to get on board, "Doesn't look like we'll wait," said a Senate Democratic source.
House Democrats have dwindling leverage. If Pelosi decides not to bring up the tax measure, the Bush tax breaks expire at the end of the year.
The reality is that come January, with the GOP in charge, Republicans will likely make permanent the tax cuts and estate tax breaks and not include the jobless benefits extension and payroll tax trim. The incentive for Republicans to go along with sweetening the package for Democrats is they can claim to be fiscal hawks and at the same time not raise the ire of the jobless.
Obama is facing repudiation from his own Democratic base on the tax deal. Rep. Peter Welch (D-Vt.) and 53 members of the U.S. House came out against the president's proposal, including four from Illinois, Danny Davis, Luis Gutierrez, Jesse Jackson Jr. and Jan Schakowsky.
Schakowsky, who was not at the caucus, told me there is still time for the package to be improved and the pressure on Obama was "constructive." The deal is "not considered soup yet," she said. "We've got more time. We're just not going to adapt that package."