Tax Cuts for the Rich! Benefits for the Poor! Previewing the Lame Duck Congress
The midterms are over. Time for the lame duck.
Democrats still control the House and hold a big majority in the Senate when they come back to work in the middle of November to tackle one of the most jam-packed lame duck sessions in recent memory. Between tax cuts for the rich and jobless benefits for the poor, it has the makings of another round of R vs D class wars.
First on the docket is the Bush tax cuts. Emboldened Republicans will continue to press for a permanent extension of the full law, which will deprive the U.S. Treasury of around $3 trillion over ten years. Democrats will try to "decouple" the tax cuts by breaking them into two bills. One bill would extend rates for 98 percent of taxpayers, perhaps permanently. The other bill would deal with the Bush tax cuts for the top two percent.
Republicans see the trap, of course. Once the president has signed the middle class tax cuts, the Democrats' will have won the game already. See, Dems can delay a vote on the upper-income tax cuts until the end of the year and let those rates revert to their year-2000 levels. Blammo! The White House tax plan would be complete: same taxes for the middle class, higher taxes for the wealthy. Republicans are too canny to fall for that.
It's more likely that Democrats will strike a deal to extend the Bush tax cuts for the rich, but perhaps temporarily. That solution would keep taxes low in the weak recovery while holding the door open for higher taxes in later years.
The Bush tax cuts are the entree for the lame duck Congress, but the list of main courses continues.
--There are big tax questions revolving around the central Bush tax law, like the Alternative Minimum Tax, which Congress "patches" every year to keep rates from rising on upper-middle income families.
-- The estate tax disappeared in 2010, but nobody expects death to be as cheap in 2011.
-- A bevy of tax credits (eg research and development, solar tech) are set to expire in December, and businesses will lobby for their renewal.
-- Jobless benefits need to be refilled for Americans on long-term unemployment insurance. Electeds are on call to stop cuts in reimbursements for doctors who treat Medicare patients.
-- The deficit commission releases its report in early December, and we might see some early jockeying on spending cuts and tax increases
-- Oh, and there's the issue of government approrpriating money to itself to fund its day-to-day operations.
And those are just the domestic issues.
So, dig in. It's going to be a long December.