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Budget Sat Dec 04 2010
Staying true to his pre-election stance, Mark Kirk this morning, in practically his first official act as Illinois Senator, joined a solid bloc of Republicans and a handful of primarily blue-dog Democrats in voting against cloture of debate on a Senate bill to extend tax cuts to American families making less than $250,000 a year. Kirk then also voted against a softened version which would have extended cuts to those making $1 million or less a year. Both votes garnered 53-vote majorities, but under the "faux filibuster" rules of the Senate, a majority vote was insufficient to move the measures forward.
It's important, as Illinoisans and Americans look at these votes, to understand the background and context. Republicans are attempting to frame the Democratic move as a "tax increase" but that is -- how to say? -- well, I'll call it a lie. In order to understand that, let's review how we got here.
In 2001, in the recession following the collapse of the tech bubble, Congress passed and President Bush signed "The Economic Growth and Tax Relief Reconciliation Act of 2001," or EGTRRA, also known as Public Law 107-16, a humongous tax bill that made large changes to the tax treatment of income, capital gains, retirement plans, educational savings, and estate and gift taxes.
The overall effect of the tax changes was known at the time to be something that, at least in the short term, would enormously increase the federal deficit. As a recent federal report recounts, the Congressional Budget Office and Joint Committee on Taxation estimated at the time of the 2001 tax cuts, the Jobs and Growth Tax Relief Reconciliation Act of 2003 (P.L. 108-27), and the Working Families Tax Relief Act of 2004 (P.L. 108-311), that the combined effect of the three Bush bills would be to increase the federal deficit by $1.76 trillion.
Under a Senate rule in place in 2001, the so-called "Byrd rule," a single Senator could block such legislation if it would significantly increase the deficit more than ten years out. The EGTRRA cuts if permanent would clearly have done that. So, in order to evade that rule, numerous EGTRRA provisions, such as the cuts in the estate tax and the income tax, had expiration dates. Thus the January, 2011 deadline we now face.
Keep that in mind. The tax cuts were passed only as "temporary." If Congress does nothing, they expire, and income taxes will return to where they were in 2001 automatically. So: the Democratic bills the GOP shot down today were not to "increase" taxes. When Republican Senate leader Mitch McConnell says, "This is really a debate on tax increases," what he is saying is false. The status quo is that taxes will return to their 2001 levels (under which the federal budget was running a surplus). The Democratic bills were for tax cuts, and the debate on those bills was a debate on who gets the cuts: the Democrats say the middle class, but McConnell, Kirk, and the Republicans demand money for multi-millionaires as well.
An argument could be made that none of the tax cuts should be extended because they are a big part of the reason -- along with a decade of orgy-level military spending -- that government is going bankrupt at all levels in the US. Or that the original tax cuts didn't give enough benefit to the middle class anyway. This is the reason, apparently, that outgoing Democratic Senator Russ Feingold voted against the move. However, the Republican motivation is different. It holds hostage tax relief for the middle class in order to make sure that those making $1 million or more a year -- not just millionaires, mind, but those with annual incomes of more than a million -- get to keep every cent of a Bush tax cut they never needed in the first place.
Kirk's stance is economic hypocrisy. He claims to oppose extension of unemployment insurance benefits on deficit grounds -- even tho the UI benefits, unlike tax cuts, would indeed pay for themselves because they are much cheaper than the societal impact of families collapsing if benefits run out. However, there is no question that extending tax cuts for the higher earners would have a large negative deficit impact -- without any commensurate economic benefit. The return to 2001 rates proposed is modest, and a group of the super-rich have in fact launched a website urging such a restoration for the sake of fiscal sanity.
This first Kirk vote sadly does not display the "moderate" or "independent" thinking on which our new Senator sold himself to Illinoisans, but is more like that of a Senator marching in lockstep with the Party of No as it attempts to make government too poor to be a force for social good.