After he brokered a deal with Congressional Republicans to extend Bush-era tax cuts and establish a sweeping estate-tax exemption in return for maintaining unemployment benefits, President Obama essentially told Congressional Democrats: Take it or leave it.

House Democrats have decided to leave it.

In a stunning setback for the president’s attempt to cobble together a compromise with Senate Republicans leaders, members of the House Democratic Caucus voted Thursday morning to reject the agreement.

With strong support from her members, House speaker Nancy Pelosi now says she will fight for a better deal.

The caucus vote took place in a closed meeting Thursday, after several days of lobbying by the White House. While some media reports have suggested that Democrats were warming to the plan, Oregon Congressman Peter DeFazio, a prime mover in the fight to block the deal, says the opposite appears to be the case.

DeFazio says the caucus was "virtually unanimous" in its support of his resolution declaring that Democrats oppose floor action on the deal as it is currently organized.

"We have tremendous concerns about what was given away by the White House to Mitch McConnell and the Senate," announced DeFazio, following the vote. "We have given our leadership license to force the Senate and the White House back to the table to get a better deal for the American people."

The vote was non-binding. But it gives Pelosi ammunition as she argues with the White House for a reworking of the agreement—perhaps with an eye toward dropping the estate-tax exemption that is particularly unpopular with House Democrats.

Pelosi’s spokesman, Brendan Daly, declared immediately after the caucus vote, "This means we will not bring this [agreement] to the floor as is. It has to be changed."

Minutes later, the speaker’s office issued a statement from Pelosi that said: "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. Democratic priorities remain clear: to provide a tax cut for working families, to create jobs and economic growth, to assist millions of our fellow Americans who have lost their jobs through no fault of their own, and to do this in a fiscally sound way."

The caucus message is clear.

DeFazio, who with Washington Democrat Jim McDermott collected fifty-five signatures from House Democrats on a petition demanding the vote, said of President Obama:  "He basically said, ‘Take it or leave it.’ We left it."

For background on the organizing that led up to the caucus vote, check out this post: "Dozens of House Dems Urge Pelosi to Block Tax Deal; Progressive Groups Ramp Up Pressure."

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