At press time, congressional leaders were seeking to resolve an impasse over the insistence by some members of the Republican leadership to hold tax sweeteners in a pension reform bill hostage to an estate tax reform package.

At risk is a years-long effort to reform the defined benefit pension system and not impose billions of dollars of cost on the federal government to bail out insolvent pension plans.

Commenting on the issue at noon last Thursday, Dermot Healey, president of the Association for Advanced Life Underwriting, said, “While the situation remains fluid at this time, it remains clear that there is still an appetite for consideration of an estate tax reform proposal in Congress that would likely prove unsustainable over the long term.”

He said the House could consider something before adjournment and send it to the Senate for consideration in September, which was the subject of an urgent meeting at noon Thursday among the Senate Republican leadership, several Senate members of the pension reform conference committee, and Sen. Max Baucus, D-Mont., ranking minority member of the Senate Finance Committee and also a member of the conference committee.

“AALU will continue its efforts to advocate in favor of fair, fiscally responsible and permanent estate tax reform, and AALU members will address this issue with legislators while they are in their home states during the August recess,” Healey said.

While negotiators working Wednesday night were able to resolve differences in the bill, four Republican senators who are members of the committee threatened not to sign the conference report if a package of so-called extenders of popular business tax cuts was removed from the pension reform bill and attached to a new estate tax bill.

That plan was hatched by Senate Majority Leader William Frist, R-Tenn., Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee, and Sen. Jon Kyl, R-Ariz., the main congressional advocate of an expansive estate tax reform package opposed by Democrats.

Supporters of outright estate tax repeal failed to win the 60 votes necessary to limit Senate debate on the measure on June 8, and Republicans remain three votes short of winning support for a rule limiting debate.

But four Republican opponents of the tactic on the conference committee, led by Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, apparently told the Republican leadership late Wednesday and early Thursday that they would not support the new effort.

In a conference call Wednesday with Iowa reporters, Grassley criticized the plan to link the estate tax with tax extenders, saying Senate Minority Leader Harry Reid, D-Nev., will not allow any estate tax compromise to become law this year. “I am told Reid said this is dead, and I am hearing from other Democrat senators it is dead,” Grassley told Iowa reporters.

“I have been advising against putting it in the pension bill for a long time and have been advising against putting it in the tax bill, the extenders,” Grassley said. “There is no sense in jeopardizing the tax extenders.”