During a non-binding caucus vote, Democrats in the House of Representatives rejected a compromise between Republicans and President Barack Obama that would extend tax cuts and unemployment benefits in its current form.
“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,” House Speaker Nancy Pelosi said in a statement.
On Thursday, the vote was a sharp rejection of the president, who earlier in the day had pushed more to get the tax-cut agreement cleared, saying that failing to pass the plan could harm the nation’s economic recovery.
After the Democrat’s vote, the White House released a statement saying final passage was still possible.
“The House and Senate are working through the normal process of bringing a bill forward, and we are confident that the major components of the tax framework that we fought for will remain in the final package brought to the floor and ultimately passed by Congress,” the statement said.
The plan extended temporary tax cuts enacted during the Bush administration for all Americans and extended unemployment benefits another 13 months. If no action is taken, the tax cuts expire at the end of the year.
Democrats in the House have said they were upset to not have been included in the negotiating process and with some of the provision in the plan, namely extending the tax cuts for even the wealthiest Americans and weaker-than-desired provision for the estate tax.
Speaking at a news conference earlier in the week, Obama defended the compromise with Republicans by saying keeping the tax cuts for poor and middle-class Americans was more important than a partisan fight.
Members of the Obama administration and the Whitehouse expect another form of the bill to pass, stating they will not anybody’s taxes go up. The Tax Bill Act is to include a 2% payroll tax cut and jobless benefit extension.