All About the Tax Cuts

Nothing will happen in Congress until there's a deal on the Bush tax cuts, AP reports:

Senate Republicans intend to block action on virtually all Democratic-backed legislation unrelated to tax cuts and government spending in the current postelection session of Congress, officials said Tuesday, adding that the leadership has quietly collected signatures on a letter pledging to carry out the strategy.

Luckily, a deal may be close at hand. From The Washington Post's Perry Bacon, Jr.:

On Tuesday, according to people in the room, both sides engaged in the kind of cross-party dealmaking that seems to have faded away in today's Washington. The participants emerged smiling and with a loose framework - though they did not outline it publicly - that could result in the temporary extension of all the tax cuts, as well as the ratification of a nuclear arms treaty with Russia, the continuation of unemployment benefits and funding for government operations into next year.

Remaining on the docket for lame-duck action are the New START arms-reduction treaty with Russia, an extension of unemployment insurance benefits, the Defense authorization bill that contains a repeal of the military's Don't Ask, Don't Tell policy, and immigration legislation that Senate Majority Leader Harry Reid has said he will bring up for a vote.

By blocking everything until a tax-cut deal is reached, Republicans, led by Minority Leader Mitch McConnell, will push everything back as lame-duck time starts running out. Democrats won't be able to begin voting on Defense amendments to try to get DADT repealed before the end of the year.

But it may not be as much of a drag on legislative action as it sounds. Democrats won't seek a deal on the Defense bill until at least Friday (at issue is how many amendments will be considered), so it would seem that Congress doesn't have anything to work on between now and next Monday anyway, except for the unemployment benefits...which, significantly, are already expiring for the unemployed.

The bargaining ploy: If Democrats want the unemployment extension, DADT, and New START before the end of the year, they're going to have to cut a deal. The obvious trade seems to be a temporary Bush-tax-cut extension in exchange for these other items, which Republicans can block if they want to. There's probably enough time to overcome GOP procedural resistance and extend unemployment insurance benefits (overcoming GOP objections would take a few days), but DADT and New START wouldn't happen.

The Bush tax cuts have to get done, anyway: Economists have warned that uncertainty and messiness would arise if the Bush tax cuts are dealt with in early 2009 and potentially applied retroactively. May as well get them over with now.