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Daschle: Killer of permanent tax cuts

By Paul M. Weyrich
web posted April 29, 2002

Remember those Bush tax cuts of last year? Remember that many of the cuts won't even go into effect until the out years. Well, in order to get the tax cuts passed in the first place, the White House and Senate and House leaders had to agree to a sunset provision for the tax cuts after 10 and 11 years. So unless the tax cuts are made permanent, in 2011 and 2012 Americans will be socked with the largest tax increase in American history. If things stand the way they are now, in 2012 Americans will be paying $354 billion in increased taxes.

House Speaker Denny Hastert wants to have the tax cuts made permanent and he intends to send over to the Senate one bill after another doing just that. He could have sent a single bill with all the tax cut provisions in it to the Senate, but he and his leadership colleagues believe that different members might want to vote for or against different components of the tax bill, although he says he is confident that he has a majority in his body for each of the provisions.

Sen. Tom DaschleThe first of these bills has now passed the House. But Senate Majority Leader Tom Daschle says these bills are dead on arrival. You may recall that the last vote Sen. Jim Jeffords cast as a Republican was in favor of the tax cut bill. He did not leave the GOP until the bill was approved 58 to 42.

Just about all of the Senators who voted for the tax cut bill, which was very modest in comparison to those pushed through by President Kennedy and President Reagan, would do so again. The problem is that with Daschle in control of the Senate calendar it takes 60 votes to vote on anything. So Speaker Hastert is going to be sending a stack of bills over to Senator Daschle, who has made it clear he will sit on the measures. In the Senate, any Senator can pull up a bill but unless that Senator has 60 votes in his pocket, it would be a futile effort to do so.

Consider some of the tax increases that will go into effect if the status quo prevails:

  • The 10 per cent bracket will go back to 15 per cent thus causing a 50 per cent increase for the poorest taxpayers.
  • The 25 per cent, 28 per cent and 33 per cent brackets will each jump by three percentage points.
  • The full marriage penalty will return in all tax brackets and even in the standard deduction.
  • The child tax credit will be slashed in half from $1,000 back to $500.
  • The death tax will be fully reinstated after having been fully eliminated.
  • The IRA contribution limit will be reduced by 60 per cent from $5,000 to $2,000.
  • The education IRA limit would be slashed by 75 per cent from $2000 down to $500.
  • The adoption tax credit will be cut in half from $10,000 to $5,000.

Rep. John Shadegg (R-AZ) , the Chairman of the Republican Study Committee in the House, has pointed out that of the 31 Senate Democrats who voted against the tax cut last year, 17 of them voted to make the 1993 Bill Clinton's massive tax increase permanent. So tax increases are permanent but tax cuts are temporary.

Every radio or television talk show that tackles the subject has experts who stress the necessity for individuals to plan for their own retirement. But how can anyone plan for retirement with these kinds of tax increases hanging over their heads?

When the tax bill was being considered last year some of the Senators in the then-majority party wanted to make the tax cuts permanent. But the group of 12 swing Democrats who voted for the ultimate compromise made it clear that they couldn't vote for a bill with permanent tax cuts because then too much of the projected surplus would disappear. At that point the Senate leadership had to decide if it was better to pass temporary tax cuts then to pass none at all.

I recall speaking with a Member of the Senate leadership at the time who said, "Oh, when the time comes, we'll have no problem getting the votes we need to make them permanent." Well, at that point this Senate leader didn't understand that future leader Daschle would require 60 votes on every issue and the net result is that the Senate has voted on almost none of the House-passed measures. In fact in the three and a half decades I have seen the Senate up close, I have never seen it operated this way. Not even George Mitchell, one of the toughest Democrats ever to have held the position, was as bold as Daschle. So when Daschle tells Speaker Hastert the permanent tax bills are dead on arrival, he can be believed. At best proponents of permanent tax cuts have 58, not 60 votes.

I have no idea how closely voters will follow an issue like this or whether it can easily be made an issue, but it seems to me that the electorate at least ought to be asked if they like Speaker Hastert's approach to tax cuts or do they agree with Majority Leader Daschle. The outcome of that debate would surely settle many other questions as well.

Paul M. Weyrich is president of the Free Congress Foundation.

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