Great news! After a year of hapless floundering, Congress appears well on its way to passing a major tax bill that will be signed by President Barack Obama.
The bill, which the House approved on Wednesday, takes 50-odd expired tax breaks and extends them – for several weeks.
“It will die on Jan. 1. It’s for last year!” said Rep. James McDermott, D-Wash., during a rather desultory House debate.
“I’m gonna vote yes like everybody else. But it makes no sense,” McDermott added helpfully.
Sign Up and Save
Get six months of free digital access to The Sacramento Bee
Well, if that’s the bar, nothing is ever going to get done.
Most of the tax breaks that expired at the start of the year because of congressional inaction are helpful to businesses. If the bill becomes law, they'll be retroactively revived. Employers who have been making investments out of blind faith will be rewarded. Then it'll be 2015 and the whole drama starts all over again.
People, does that make sense to you? Well, it did to the House, which easily passed the bill after a brief debate during which members from both parties came together and agreed that their work was “not perfect.”
“A terrible way to make tax policy,” said Rep. Dave Camp, R-Mich., the chairman of the Ways and Means Committee, which makes, um, tax policy.
Camp, who is retiring, got many, many plaudits during the debate for his efforts to produce serious tax reform this year. At the time, his fellow Republicans were horrified by his proposal to make modest reductions in the top business tax rate by closing beloved tax loopholes. House Speaker John Boehner made fun of him. The bill never got out of Camp’s own committee.
On the plus side, he was really popular on Wednesday as he introduced what was left of his tax bill, which was the legislative equivalent of a wilted piece of arugula.
“I would prefer to be debating reform,” said Rep. Pete Sessions, R-Texas, the powerful chairman of the Rules Committee. This was shortly after he acknowledged the bill was “far from perfect.”
Sessions is from Texas. Next year, the House will have six committee chairs from Texas, while Sen. John Cornyn of Texas will be No. 2 leader in the Senate. Also, Sen. Ted Cruz of Texas is clearly running for president, as is Gov. Rick Perry. This has nothing to do with the tax bill. I just thought you ought to be prepared.
But about taxes. Everybody agrees we need tax reform. Our current tax policy has about as many fans as that airplane passenger who took a pet pig to her seat as an “emotional support animal.”
There is not going to be any major tax reform. There are members of Congress, like Camp and the Senate Finance chairman, Sen. Ron Wyden, D-Ore., who believe there’s got to be a way. If you run into either of them on the street, give him a hearty handshake. But don’t hold your breath.
The latest battle over those expired tax breaks began when the House Republicans tried to make some permanent. And, really, they ought to be forever or not at all. But it created a problem for lawmakers who were worried about low-wage workers. There are parts of the earned-income tax credit and the child tax credit that expire in 2017, at which point their supporters expected to trade extensions with the business advocates.
There was a time when we thought that kind of trading was depressing sausage-making. Now, of course, we regard the era when that stuff worked as Athens in the age of Pericles.
Wyden says he thought negotiations were going along pretty well for a plan that made both the most important business tax breaks and the biggest ones for low-income workers permanent. Then, he said, the Republicans disappeared.
What do you think was bothering the Republicans? A) The sudden realization that tax cuts actually do add to the federal deficit. Or B) President Obama’s executive order giving unauthorized immigrants the right to stay in the country.
Yes! Some Republicans said they were worried that the tax breaks for low-wage workers would help the unauthorized immigrants. We do not need to discuss whether or not this is actually a problem. We just need to acknowledge that whenever the Republicans do not want to do something for the next two years, they’re going to play the immigrant card.
Enter the Senate majority leader, Sen. Harry Reid of Nevada, who was possibly interested in a deal that dropped the breaks for low-wage workers but added a permanent sales tax deduction for people who live in states without income taxes. Such as Nevada.
Returning from Thanksgiving vacation, Wyden said, “I heard all these rumors about what was being worked out. And about an hour later the president called and said he was going to veto what was being discussed.”
And here we are. With maximum effort, it’s possible Congress might manage to pass a last-minute retroactive bill to keep some popular tax cuts alive for the holiday season. Which Obama would sign.
But I have seen the future, and it’s worse.