House barely sneaks home after failing to act on tax cuts

Posted on September 29, 2010


The House vote to adjourn until after the November elections took a surprising turn when House Minority Leader John Boehner took to the floor and urged Congress not to adjourn until it had acted in one manner or another on the extension or expiration of the Bush-era tax cuts. In response, Nancy Pelosi was forced into casting the deciding vote as 39 House Democrats voted with Republicans to remain in Washington to work on the tax cut issue, with Democrats prevailing and ending the House session by a narrow 210-209 margin.

Was it political theater on the part of Mr. Boehner? Almost assuredly. But the fact remains that uncertainty hangs over many taxpayers and many small businesses regarding what they will pay in taxes next year. The Bush tax cuts, enacted via reconciliation when Democrats refused to go along with them, are slated to end next year as required under budget reconciliation procedures. Democrats have promised that no one making under $250K will see a tax increase as a result of the tax cuts expiring, but many have been either coy or downright hostile to the idea of extending all of them.

Don’t let anyone try to get cute with terminology – if you willfully allow a tax cut to expire, you are raising taxes. Small businesses, already in doubt over new potential health care costs and the ridiculous 1099 provision within it, have no idea whether they’ll be able to count on their current level of taxation or plan on paying more in taxes and paying in less in capital improvements and payroll expansion.

Almost more than anything else, uncertainty is a job-killer. Businesses like to have a good feel for the economic climate before feeling comfortable enough to expand or hire on more workers. Punting on dealing with the tax cuts does nothing to end that uncertainty, and demonstrates a craven political reaction to put electoral machinations ahead of policy decisions.

Let’s be honest – the real reason Democrats didn’t want to deal with the tax issue to avoid yet another thorny issue before Election Day. Many Democrats were beginning to get vocal about extending all of the tax cuts, but that doesn’t jive with the message of the leadership and the liberal base who have spent the last eight years portraying the tax cuts as exclusive handouts to the rich. Funny how the middle class cuts that were always part of the deal are now suddenly so centrally important to the health of the country.

Democrats simply didn’t want to have the courage of their convictions to end so-called wealthy tax cuts before a huge midterm election. Sure, they might have gotten (rightfully) hammered by Republicans, but the left would have been thrilled that the evil rich got it stuck to ’em. Now, pretty much everyone is shaking their heads at, once again, a failure of leadership to produce meaningful action on issues the country cares about.

If Democrats were hoping to avoid painful election ads about raising taxes, they’re going to get painful election ads anyway about forsaking important policy decisions that could have easily been resolved fairly quickly. And that’s to say nothing of the fact that Congress has yet to pass a budget for next year – its primary responsibility, I might add. I wonder if they’ll be as proud running on this as they have the rest of their fantastically historic legislative agenda. My guess would be no.

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