Michael Barone: Here comes the cliff

BY MICHAEL BARONE Published: December 26, 2012
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Last week, Republicans proved they are not a governing party. Now we will see whether Democrats are.

A governing party would have, reluctantly, passed Speaker John Boehner's Plan B, which would have preserved the current tax rates on everyone with incomes under $1 million.

Passage would have put Senate Democrats on the spot, since they voted for a similar measure in 2010. They might have engaged in negotiations with Boehner that could have been more productive than his negotiations with Barack Obama this month and in the summer of 2011.

But Boehner could not get enough Republicans to vote for Plan B to pass it in the face of united Democratic opposition. He could have afforded to lose 23 Republicans and still prevail.

He must have been well short of that goal. House leaders usually take measures to the floor on which they're short only a few votes and squeeze out the last votes there. It's not a pretty process — House Republicans held the roll call open for three hours to pass the Medicare prescription drug bill in 2003 — but it's one way laws get made.

Some may wonder why we are in a situation in which tax rates will automatically rise if Congress doesn't act. Why do current tax rates expire?

The reason is that George W. Bush and congressional leaders made a gamble when they cut taxes in 2001 and 2003. They could probably have gotten 60 votes in the Senate for a smaller package of tax cuts.

Instead, they decided to go big and pass them under budget rules requiring only 50 votes but which also required that the rates would expire after 10 years. The economy was weak back then, and you could argue that the stimulative effect of the cuts before and after the 2008 crash was worth the gamble.

And you can note that the tax cut policy has endured for some considerable time. It survived the Democrats' capture of both houses of Congress in 2006 and the presidency in 2008.

It survived the period from July 2009 to January 2010, when Democrats had a supermajority in the Senate and probably had the votes to raise tax rates. And it survived two more years when, after Republicans' capture of the House in November 2010, Obama felt obliged to continue the tax rates a month later.

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