Legislative Lowdown: This Week in Washington

Monday, December 31st, 2012 and is filed under Blog, News, Taxes

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Due to the Holiday weekend, we will not be sending out our weekly legislative bulletin, the Madisonian.  Nonetheless, this is a busy week.  Here is what we must prepare for.

This will be one of the most unique weeks in Washington.  For the first time in 4 decades, a previous Congress and a new Congress will operate during the same week.  Due to the eleventh hour work on the tax cliff spilling into the new year, the members of the 112th Congress are still in town, even as the new members of the 113th Congress are sworn in this Thursday.  This creates a double opportunity for politicians to stick us with bad legislation.

Tax Cliff – In the final day before the Bush tax rates are scheduled to expire, Republicans and Democrats are actually not too far apart in their respective positions, despite failing to strike a deal.  It’s amazing how they pretty much agree on all the fundamentals, even as they haggle over the minutia.  The bottom line is that they are both willing to raise taxes on upper-income earners while offering no meaningful spending cuts.  They have also agreed to let the sequester take effect for now.

Harry Reid is offering to raise the rates (income, capital gains, and dividends) on individuals earning more than $360,000 and families earning more than $450,000.  Republican senators countered with an offer to raise the threshold for individuals to $450,000 and families to $550,000.  Meanwhile, Mitch McConnell and Joe Biden are negotiating a deal which would use the threshold of $400,000 for individual filers and $450,000 for families. Republicans are still demanding that the current Death Tax rate – 35% at a $5 million exemption – be extended permanently, while Democrats want the rate to go up to 45%.  For their part, Republicans have agreed to drop their demand that Social Security benefits be adjusted to reflect a slower rate of growth as calculated by the “chained CPI.”  The emerging deal would also throw in yet another extension of the super long-term unemployment benefits without paying for them.

The irony is that none of these plans would bring in a significant amount of revenue, even for those who subscribe to the notion that we should deal with the debt problem through tax increases.  So once again, we are headed for a deal where taxes go up, spending stays the same, and the debt will continue to increase.  Remember that even the paltry sum of revenue that is projected to come into the Treasury from the tax increases is unrealistic because those estimates are not factoring in the damage to the economy created by such tax hikes.

Meanwhile, nothing is being done about the 5 major Obamacare tax hikes that are set to take effect this week, including the deleterious 2.3% tax on all medical devices, the millionaires’ surtax, and the 0.9% increase of the Medicare payroll tax.

Then there is the debt ceiling which will be breached this week, but the Treasury will enact “extraordinary measures” to maneuver some debt payments in a way that will forestall the deadline for another two months.  At present, neither party has proposed a credible plan to limit government in a way that will ensure this will be our last debt limit increase.  Conservatives must oppose any effort to raise the debt limit without such a plan.

Finally, we must remember that January 1 is not the end of the story.  It’s not a cliff.  Congress can always extend the rates retroactively, and if that is done within the first month or so, there will be only minimal disruptions to payroll.  The idea that there must be an agreement by midnight is absurd.

Farm Bill/Milk Price Controls

Conservatives successfully blocked the enactment of a new 5-year farm bill, which would have permanently locked in Obama’s food stamp spending levels and would have created new crop insurance and price support programs.  Unfortunately, proponents of the bloated farm bill have always been able to hold an archaic bogyman over those of us who seek to stymie the farm bill.  Pursuant to an insane 1949 act of Congress, if an extension of the 2008 farm bill is not passed, the government must begin imposing Soviet-style price controls on milk by decreasing supplies through massive purchases of milk, butter, cheese, and other dairy products.  Under permanent law, the USDA would begin purchasing dairy products at a rate of $38.54 per hundredweight, more than double the current price ($18 per hundredweight).  This market manipulation could double the price of milk, dairy products, and everything else up the food chain.

In a sane world, both houses of Congress would convene and repeal this inane and outdated law within a few minutes by unanimous consent.  That way we could debate a long-term farm bill without having the sword of the 1949 law brandished over our necks and forcing Congress to rush through bad legislation.

However, Congress is not sane, and they have no plans to repeal the law.  They are still trying to block the law by passing a new extension of the farm bill – yet another oblique and temporary panacea!  Last week, House leaders offered three options, including an extension of current farm programs until the end of FY 2013, along with two 30-day extensions as alternative options.  The problem with the extension is that it continues to offer direct subsidies to farmers, something that both sides have already agreed to terminate.  It also includes $850 million in dubious emergency funding, which is not offset with other savings within the fiscal year.  Furthermore, this bill contains its own version of milk price supports and dairy regulations, which were referred to as “Soviet-style” by none other than Speaker Boehner.  Finally, this bill does nothing to end the ridiculous practice of pairing food stamp spending with agriculture programs.

Hurricane Sandy Relief Bill – Late into the weekend, the Senate passed Obama’s bloated Sandy “relief” bill (H.R. 1) 62-32.  The $60.4 billion price tag makes this the most expensive disaster aid bill on record.  It’s full of special interest projects that have nothing to do with the emergency, as witnessed by the fact that 64% of the funds will not be spent until FY 2015.  [Taxpayers for Commonsense has a good rundown of the wasteful provision.]  Nonetheless, the bill passed with the support of 12 Republicans.  However, due to the expiration of the 112th Congress this week, the bill will become void in the new Congress.  A new bill will have to originate in the House.  Conservatives must demand that any bill be limited to necessary and immediate disaster spending; that it be offset by other spending cuts; that it includes accountability measures for FEMA.  Unfortunately, the Senate will now have more leverage thanks to the 12 Republicans who voted for Obama’s Christmas wish list.

113th Congress – On Thursday, both houses of Congress will meet to commence the 113th Congress.  They will first vote to adopt the new rules of each chamber, and in the House, members will elect the Speaker.  At this point, for better or worse, there appears to be no challenge to John Boehner’s bid for s second term as Speaker.  In the Senate, there is a serious threat of Harry Reid limiting the filibuster through a manipulation of the rules, known as “the nuclear option.”

At this point, the leadership hierarchy for the next session of Congress is as follows:

Senate (Democrat)

  • Majority Leader : Harry Reid
  • Majority Whip: Dick Durbin
  • Caucus Vice Chair and Policy Committee Chair: Chuck Schumer
  • Caucus Secretary: Patty Murray
  • Senatorial Campaign Committee Chair: Michael Bennet
  • Policy Committee Vice Chair: Debbie Stabenow

Senate (Republican)

  • Minority Leader: Mitch McConnell
  • Minority Whip: John Cornyn
  • Conference Chairman: John Thune
  • Policy Committee Chairman: John Barrasso
  • Conference Vice Chair: Roy Blunt
  • Senatorial Committee Chair: Jerry Moran

House of Representatives

Speaker of the House: John Boehner

Majority (Republican) leadership

  • Majority Leader: Eric Cantor
  • Majority Whip: Kevin McCarthy
  • Majority Chief Deputy Whip: Peter Roskam
  • Conference Chair: Cathy McMorris-Rodgers
  • Campaign Committee Chairman: Greg Walden
  • Policy Committee Chairman: James Lankford
  • Conference Vice-Chair: Lynn Jenkins
  • Conference Secretary: Virginia Foxx

Minority (Democrat) leadership

  • Minority Leader: Nancy Pelosi
  • Minority Whip: Steny Hoyer
  • Assistant Democratic Leader: Jim Clyburn
  • Senior Chief Deputy Minority Whip: John Lewis
  • Caucus Chairman: Xavier Becerra
  • Caucus Vice-Chairman: Joseph Crowley
  • Campaign Committee Chairman: Steve Israel

Overall, the balance of power in the Senate will change from a Democrat majority of 53-47 to a majority of 55-45.  The Republican majority in the House will shrink slightly from 242 seats to a majority of 234 to 201 Democrats.