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Van Hollen To White House: We're Not Bluffing On Estate Tax

First Posted: 12/10/10 04:57 PM ET Updated: 05/25/11 07:20 PM ET

Van Hollen

WASHINGTON -- Rep. Chris Van Hollen (D-MD), the incoming ranking member of the House Budget Committee and one of the chief negotiators of a deal to resolve the expiring Bush tax cuts, warned on Friday that the White House would be wrong to assume that Democratic frustration with the framework is just letting off steam.

Lawmakers, the Maryland Democrat insisted, are serious about efforts to tinker with the deal the president reached with Republicans. Moreover, they felt that there was plenty of time -- and political latitude -- to refigure certain provisions, namely the estate tax.

"We've got till the end of December," Van Hollen told The Huffington Post.

The Congressmen's foreshadowing of political brinksmanship seemed already evident on cable TV. In the Senate, Bernie Sanders (I-VT) was in the midst of his fifth consecutive hour of filibustering the measure. On the House side, the Congressional Black Caucus said it would oppose it as well.

Expectations of success, however, remained relatively limited. And Van Hollen himself seemed resigned to the notion that some package would pass. Just not, he hoped, the current one.

In particular, the Maryland Democrat was aggrieved with what he thinks is a porous, one-sided bargain the president cut with Republicans over the estate tax -- a bargain that he hinted was cut behind his back and would prove "a bridge too far" for the rest of the caucus.

"As someone who was involved in many of these discussions, obviously not involved in the phone conversations between the Vice President of the United States and [Senate Minority Leader] Mitch McConnell, but as someone involved in the other discussions, and someone who understands that we have to find a way to prevent middle class taxes from going up in January, this is a provision that is not at the core of the deal and... is rightly seen by the overwhelming majority of the Democratic caucus as egregious and unnecessary."

How egregious and unnecessary remains up for debate. If no new law were passed, the estate tax exemption would have gone back to $1 million on Jan. 1, 2011, with the top rates rising to 55 percent. The cost of agreeing to Republican demands -- which would tax estates valued $5 million or higher per person at a rate of 35 percent -- is roughly $68 billion relative to current law. The costs of reverting to 2009 levels -- which had a threshold of $3.5 million and a tax rate of 45 percent -- would have been $43 billion.

White House Press Secretary Robert Gibbs argued this past week that the deal the president cut essentially forfeited $24 billion over the course of two years; in other words: the difference between the cost of the GOP plan and 2009 rates. House Democrats, in arguments being made to leadership, have said the price tag should be considered much higher: as rates would have gone back to pre-2009 levels.

The debate over whose math is accurate isn't some esoteric exercise in political bargaining. The White House has hinted that it is hesitant if not fully opposed to altering the deal's contours, including those for the estate tax.

"This is not something that we were the champions of," said Gibbs. "How did it get in there? It got in there because this is what the Republicans said was the price of coming along for extending tax cuts for the middle class... would we prefer a different rate? Yes. Again, there are -- that's why compromise is never easy."

But if Van Hollen is being sincere, as opposed to merely bluffing, there is a fair chance that many members will walk if they don't see some tinkering.

"In the House, you've got an overwhelming sentiment here that the estate tax provision is a giveaway that's way over the top and adds to the deficit and is not necessary to the core deal," he said.

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