Lameduck Chickens

Lameduck Chickens
By Ross Kaminsky on 12.3.10 @ 6:08AM

If the lame-duck session of Congress shows anything, it's that Congressional Democrats learned nothing from their recent electoral "shellacking" and, perhaps surprisingly, the Republicans have learned something.

On Thursday afternoon, the House passed a measure extending the Bush tax cuts except for the upper income bracket. The final count was 234-188, with 20 Democrats voting against the amendment and only three Republicans supporting it, with one of the lonely three being the often-lonely Ron Paul.

The intent was to make Republicans look bad by voting against "middle-class tax cuts"; that purpose was not lost on soon-to-be Speaker of the House John Boehner who called the vote "chicken crap." House Majority Leader Steny Hoyer (D-MD) pushed the vote forward while talking about tying a vote on an extension of the current tax rates for higher income earners to a vote on extending unemployment benefits past 99 weeks.

Hoyer's move appeared to conflict with the outcome of Tuesday's meeting between Barack Obama and House and Senate leaders of both parties following which negotiators were named by all sides to try to reach a compromise. Rep. Dave Camp (R-MI), who will be the chairman of the House Ways and Means Committee in the next Congress, and Senator Max Baucus, the Senate Democrats' negotiator and chairman of the Senate Finance Committee, both called Wednesday for a delay in the vote. As Baucus sensibly put it, "I think it's important to have that meeting [of the appointed negotiators] first to see where we are."

However, the fact that Chris ("We'll keep the majority") Van Hollen (D-MD) was chosen as the House Democrats' negotiator was a clear early signal that the Democrat leadership has no interest in anything but soaking the so-called rich, that they're interested in the most spiteful possible end to the most hyper-partisan anti-business Congress in generations.

A question going into the vote was whether outgoing Speaker of the House Nancy Pelosi has the same arm-twisting ability that she had before presiding over the destruction of the political careers of more than a quarter of her caucus. Would the two dozen "Blue Dog" Democrats who lost their jobs (and the two dozen who didn't lose) side with the woman who made them choose between the Obama/Pelosi/Reid union-dominated dystopian vision of America and the wishes and values of their own constituents? (One still has to wonder just what caused so many of those Blue Lap Dogs to choose the former over the latter.)

The answer, sadly, was yes. Of the 54 members of the Blue Dog Coalition who claim to be "independent voices for fiscal responsibility," only 10 voted against Nancy Pelosi, and only five of those will be in Congress next year. Of the 10 "no" votes who were not Blue Dogs, six will be in Congress next year but most of those inhabit the far left wing of the Democrat party and voted against the measure because they oppose extending the Bush tax cuts for anybody.

In the meantime, Senate Republicans are showing they got the message of November 2. All 42 current Republicans (it's now 42 because Mark Kirk of Illinois got seated immediately) signed a letter to Majority Leader Harry Reid saying they "will not agree to invoke cloture on the motion to proceed to any legislative item until the Senate has acted to fund the government and we have prevented the tax increase that is currently awaiting all American taxpayers."

In other words, even the barely-Republican Olympia Snowe and Susan Collins from Maine, George Voinovich (OH), Lisa Murkowski (AK), and the newest RINO, Mark Kirk, have committed to blocking the Democrats wish-list of such things as repeal of "Don't Ask, Don't Tell," passage of the newest iteration of the START Treaty, and especially extension of the unemployment-causing unemployment benefits until a budget and the tax rate extension are passed.

In their letter Senate Republicans also made clear they have no interest in dividing the vote on extending the current tax rates along income bracket lines; they want all the Bush tax cuts extended: "If Congress were to adopt the President's tax proposal to prevent the tax increase for only some Americans, small businesses will be targeted with a job-killing tax increase at the worst possible time. Specifically, more than 750,000 small businesses will see a tax increase, which will affect 50 percent of small-business income and nearly 25 percent of the entire workforce." There appear to be half a dozen Senate Democrats who agree with the Republican position.

This is a critical point for Republicans to stick to, and not just for the politics of this vote: the vote on extending the current tax rates must cover all tax brackets, and the extension for all brackets must be of equal duration. The worst possible outcome for the economy (short of allowing all the tax cuts to expire) and for Republicans politically would be to have the upper income tax rates reset at a different time than the rest, leaving a stand-alone future vote on that bracket's tax rate.

Politically, I would not want to count on the barely-Republicans in the House and Senate to stick to their current low-tax discipline, especially if economic conditions improve and the Democrats argue against extending the top tax rate in the name of "deficit reduction" or try to enforce "PayGo" rules making extending the rate "too expensive." Economically, as bad as high tax rates are, uncertainty may be even worse. Businesses are formed and their plans are made based on expectations about the rules of the game for more than just a year or two in the future. Leaving in flux a tax rate that impacts so many small and mid-sized businesses is a recipe for continuing the weak job growth that is one of the signature characteristics of the current "recovery."

While it remains to be seen whether the historically unreliable Senate Republican crew sticks to its guns, getting the sort of unanimity represented in their letter to Harry Reid shows that Republicans fear voter reaction more than Democrats do. The difference makes sense: The House Democrats who were vulnerable to being unelected by citizens who vote based on economic rationality or disgust with arrogant, imperial government have already lost. The rest, given their ability to survive last month's tsunami, are presumably safe, living in districts full of people who will always vote "D" despite the persistent obvious failures of Progressive policy.

Some Senate Democrats from purple or red states who were not up for election this year such as Max Baucus and Nebraska's Ben Nelson don't know that they're safe and are likely to side, at least occasionally, with their Republican colleagues. As importantly, Republican senators watched Tea Party candidates beat "establishment" GOP candidates in primary races around the country. Republican members of Congress will be kept in line by the thing that scares politicians most: the possibility of not being re-elected. This fear, more than anything, is the value of the Tea Party movement and the reason that Tea Party activists must consistently remind Republican politicians that we're watching what they do, not just what they say.

In the meantime, the House Democrat leadership will play its games, weakened by the conciliatory hints made by Barack Obama and his teleprompter-script writer-in-chief, David Axelrod. But they're fighting a losing game at this point, just a few weeks away from becoming the minority party and facing the most unified Republican Senate caucus in recent memory. Pelosi, Hoyer, and Van Hollen will be seen as leftist toddlers lying on the floor, pounding their fists and screaming as the adults in the room give them a well-earned "time out" after forcing the extension all the current tax rates and reminding House Democrats that America just voted overwhelmingly against self-destructive class warfare.

And as if all this isn't confusing enough, word leaked out on Thursday that President Obama wants to extend certain tax provisions contained within the "stimulus" bill along with the Bush tax cuts, making the argument that Keynesian redistribution and spending is better for the economy than tax cuts. This intransigence, along with Pelosi's, increases the chances that Senate Republicans will call the House's bluff and refuse to pass anything, leaving it to next year's House GOP majority and narrower Democratic majority in the Senate to pass an extension of all the Bush tax cuts and dare Barack Obama to veto it.

UPDATE: Senate Majority Leader Harry Reid now plans to have two Senate votes on Saturday regarding the Bush tax cuts. However, neither would extend them for everybody. The first would essentially agree with the House's move to extend the current rates only for families making less than $250,000 and the second would extend them for people making less than $1 million. Neither is likely to be able to get past a Republican filibuster as promised in the GOP Senators' letter to Harry Reid. Indeed, partly to make a statement, very few Republicans may even show up for the vote as a filibuster can be put in place by just one senator. The politics of the situation got substantially worse for the Democrats on Friday morning with the release of November's employment data. The Labor Department reported an anemic 39,000 new non-farm jobs in November, much lower than the 155,000 estimate of a survey of economists and the unemployment rate jumped to 9.8%. To the extent that Americans are convinced that raising tax rates on "the rich" is bad for job creation, today's news was a body-blow to the Democrats' class warfare-based tax plans.