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Would Senate Republicans Blow Up Tax Cut Deal To Defend Trust Funds?

First Posted: 12/14/10 04:59 PM ET Updated: 05/25/11 07:20 PM ET

John Kyl

Senate Republicans warned House Democrats not to amend the tax cut deal they struck with President Obama, with many saying they will oppose the final bill if the House makes its threatened changes to the estate tax provision. House Democrats plan to meet tonight to decide the way forward, with a faction pressing to call what they think is a Republican bluff.

Senate Minority Whip Jon Kyl (R-Ariz.), the Republican most closely associated with the estate-tax portion of the deal, wouldn't entertain the possibility that Democrats might amend the Senate bill.

"There is no change in the agreement. There will be no change in the agreement," Kyl told HuffPost in the Capitol. "I'm just telling you it isn't going to happen, so don't speculate about it."

Sen. Orrin Hatch (R-Utah) remarked at the size of the Republican victory on the estate tax in negotiations with Obama. "We had the president--George W. Bush--we couldn't get it done then and we're getting it done here," he said.

If Congress does nothing, the rate in 2011 will be 55 percent and the first million dollars of inheritance would be exempt. The deal as it stands would exempt the first five million dollars of inheritance and charge a 35 percent rate on amounts above that. The Democratic proposal would lower the threshold to $3.5 million and hike the rate to 45 percent.

Would Senate Republicans blow up the entire tax-cut deal--including tax cuts for the wealthy--over a change of that size to the estate tax?

"They know that if they do this, we're going to be--this might not hold," Hatch warned the House.

Might not?

"I think it won't hold if they start playing around with the tax relief that's currently in the package," he clarified to HuffPost.

But Hatch said he's also concerned about what could happen if the deal blows up. "I do not want to go through another two years where we have a two percent hit on GDP. That could really put us spiraling into even a depression, and that's what the economists, what the CBO says," said Hatch.

Several Republicans cited the solid show of bipartisan support in the 83-15 vote Monday to move forward on the bill.

"It won 83-15 yesterday. It's a strong message to the House that there's bipartisan support for what passed in the Senate. They should not change it at all," said Sen. John Barrasso (R-Wyo.).

What if they did?

"We'll have to see what happens, but they shouldn't change it at all," he said.

Sen. Bob Bennett (R-Utah) said he thought his colleagues would be willing to kill it, but that the blame would go to Democrats. "The package was very carefully put together, and any attempt to take a significant piece of it out is an attempt to kill it," he said.

The House Democratic plan "puts family farms and small businesses at risk. I wouldn't be inclined to do that," said Sen. Lindsey Graham (R-S.C.).

But would you vote against it?

"I mean, we got 85 votes. I think that speaks loudly and clearly about the package," Graham replied.

Sen. Max Baucus (D-Mont.) said that he thought Republicans would ultimately accept such an amendment by the House, but added--three separate times--that he had nothing to do with the deal. "You'd have to ask the Vice President and [Minority Leader Mitch] McConnell that question since they're the ones that put that deal together," he said.

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