by Linda Beale
Payroll Tax Cut -Keystone vote up Saturday at 9 in Senate
Apparently, Senate leaders on Friday ironed out the difficulty between the GOP and the Democratic party. The GOP got most everything it wanted, and the Dems got just barely more than nothing. That’s the way “negotiating” seems to go in the Congress these days. The right demands and demands and demands and gets most of it by obfuscating and obstructing.
This time the Dems were worried about not getting a spending bill. So while the House passed a spending bill to carry the Federal Government through September 2012, the Senate caved on all the things they’d said they wouldn’t cave on–like the ridiculous provision for expedited approval of the Keystone Pipeline. All to get just a 2-month extension of the payroll tax cut and expanded unemployment benefits–which the GOP knew it could not afford not to pass, no matter what. And Obama has already flipped on his earlier looks-like-he’s-finally-figured-out-how-to-stand-tall position that he would veto any bill that carried the expedited Keystone approval provision. See Steinhaur & Pear, Senate Agrees to a Two-Month Extension of the Tax Cut, New York Times (Dec. 16, 2011).
The GOP continues to call the Keystone pipeline project a “job creator”, even though it will create no more than 50 permanent jobs, at a considerable environmental cost. Schumer calls the Keystone provision a “Pyrrhic victory” for the GOP, because he says Obama will not approve it if pushed. That’s not so clear to me. Schumer also spins the cave-in as a victory for Dems! saying that the GOP won’t have the leverage of the need to pass a spending bill when this issue comes back. See Rubin et al, U.S. Senate Leaders Agree on Two-Month Payroll Cut , Bloomberg.com (Dec. 16, 2011).
Again, past experience suggests this may be too rosy an assessment. There were commentators who thought that surely the Congress would not pass further tax cuts after the 2001 tax cuts resulted in large deficits but instead we got the 2003 bill and the 2004 tax giveaway for corporations bill and many others, with the deficits mounting with each one. One would have thought that the sunset of the various Bush tax cuts in 2010 would have been a perfect time for the Dems to develop a spine, but they didn’t. And the Dems weren’t even able to pass a bill ending the carried interest subsidy for hedge fund managers, in spite of the Great Recession and the need to reign in financial institutions.
The Senate bill will apparently at least not include some of the bad stuff that was in HR 3630 as passed by the House–it is “scaled back” so it looks like medicare premiums won’t rise for seniors, and the GOP won’t win its attempt to end medicare’s coverage of outpatient rehabilitative therapy for stroke victims and medicare payments to doctors will not be affected. Nor will it include the “extensions” of expiring tax provisions like the R&D credit or the active financing exception for the financial industries’ deferral of its offshoreprofits. Id.
The Senate bill will apparently be paid for by raising the guarantee fees for Freddie and Fannie, something that was included in HR 3630. Id. Vote is to take place at 9 am Saturday.
crossposted at ataxingmatter