November 22, 2010

November 22, 2010 | Commentary on Taxes

Lame Duck Dangers

Democrat leaders in Congress also want to tackle the controversial issue of immigration reform, the DREAM Act, and Don’t Ask, Don’t Tell during this Lame Duck. Hold on to your wallet, because this Lame Duck may take actions to increase your debt and increase your tax burden.

The Lame Duck session of Congress has many items on the agenda, but only two are “must pass” – appropriations bills and tax cuts for all Americans.

Congress has yet to complete work on the 12 appropriations bills necessary to keep the discretionary budget of the government funded into next year. The current Continuing Resolution (CR) goes until Dec. 3. (A CR is a bill that funds the federal government under last year’s levels until it expires.)

Congress is going to have to decide between an Omnibus Spending bill, which combines the 12 appropriations bills into one, or another CR. It’s going to be tough to pass the Omnibus spending bill, drafted in secret by Democratic House appropriators, because information has leaked out that it costs $1.108 trillion and is loaded with earmarks.

House and Senate Republicans have banned earmarking. Any appropriations bill loaded with earmarks will have a difficult time passing this year. A CR seems the most likely outcome.

The second must-pass item: an extension of the 2001/03 tax cuts. The president has a summit scheduled for Republican and Democrat members of Congress on Nov. 30. A deal may be cut to extend the tax cuts for a year or two. One emerging problem is that liberals are trying to “decouple” tax cuts for job creators, those making over $250,000/yr, the death tax, capital gains, and dividends from those with incomes of $250,000 or less. Conservatives want all tax cuts to remain in place for all Americans.

There may not be enough common ground to pass an extension of any tax cuts this year. If Congress takes no action, this issue will be kicked into next year when income tax rates, the death tax, dividends and capital gains rates are scheduled to rise.

Other Expensive Lame Duck Ideas

The rate that the federal government pays to physicians who treat Medicare patients is scheduled to be cut 23% on Dec. 1. This cut is commonly referred to as “Doc Fix” and it’s estimated to cost between $17 and 20 billion. Unemployment insurance expires on Dec. 1 for many unemployed Americans, and liberals want to pass an extension for 13 weeks. This idea would cost $10 billion a month.

Other issues for the Lame Duck are an increase in Federal Aviation Administration’s fees to passengers called the Passenger Facility Charge (PFC) and a Temporary Assistance for Needy Families (TANF) emergency fund. Liberals would like to pass these expensive ideas without offsetting billions in new spending. The President’s Deficit Commission is expected to submit a report to Congress on Dec. 1 on this idea, which may lead to an estimated $1 trillion in new taxes over the next 10 years.

Democrat leaders in Congress also want to tackle the controversial issue of immigration reform, the DREAM Act, and Don’t Ask, Don’t Tell during this Lame Duck. Hold on to your wallet, because this Lame Duck may take actions to increase your debt and increase your tax burden.

Earmarks

Both House and Senate Republicans have sworn off earmarks. Now the real battle begins to end the practice for all members of Congress. Congressional experts believe that expected Speaker of the House John Boehner (R-Ohio) will try to change the rules of the House to make earmarking against the rules in January.

In the Senate, Sen. Tom Coburn (R-Okla.) will team up with Jim DeMint (R-S.C.) and John McCain (R-Ariz.), and a handful of Democrats, to pass a rule to ban earmarks. What they have to do is create a point of order making earmarks out of order in the Senate. That rules change would take 67 votes. Another option is to create a point of order during the annual consideration of the budget for a one-year ban of earmarks. Yet that one-year ban would only require a simple majority to pass.

New START Treaty

The president is putting on a full court press to pass the New START Treaty in Lame Duck. Sen. Jon Kyl (R-Ariz.) has demanded a promise out of the Obama administration to dedicate billions for nuclear modernization in consideration of his support. Sen. DeMint has demanded to know if this Treaty will harm our nation’s missile-defense system. These two issues have yet to be resolved to the satisfaction of Kyl and DeMint. Treaties require 67 Senate votes, and Sen. Kyl has expressed his view that the Treaty will not be considered by the full Senate until 2011.

Brian Darling is director of U.S. Senate Relations at The Heritage Foundation.

About the Author

Brian Darling Senior Fellow for Government Studies
Government Studies

First appeared in Human Events