AMT debate sends the Senate into incoherence

December 7, 2007

After several weeks of nonsensical wrangling, the Senate passed a temporary fix that will prevent the alternative minimum tax (AMT) from hitting millions of middle-class Americans. That may sound like a good day’s work, but this entire process, and yesterday’s conclusion, has been unusually absurd, even by Republican standards.

The WaPo’s story on this had a misleading lede:

Eleven months after adopting stringent new rules aimed at reining in the federal deficit, the Senate last night shrugged off its pledge of fiscal rectitude and overwhelmingly approved a measure to spare millions of families from the growing reach of the alternative minimum tax without providing an offsetting tax increase.

The Senate’s 88 to 5 vote blew a $50 billion hole in the Democrats’ promise not to pass any spending or tax measure that would add to the deficit.

This makes it sound as if irresponsible Senate Dems blew off their fiscally-responsible promises in order to pass a $50 billion tax cut. But that’s not even close to what actually happened, and blasting Dems for the result gets the story backwards.

Dems have been working, diligently, to get an AMT fix passed. Indeed, the Democratic leadership has been trying to fast-track the fix for weeks. Senate Republicans have not only tried to slow this down, they’ve threatened to filibuster any AMT fix that doesn’t also include multiple additional tax cuts for the wealthy.

Got that? Senate Dems wanted to pass a tax cut to help the middle-class, but Republicans refused to go along, unless there were also more tax cuts for the rich. As the GOP sees the budget, the only way to balance a tax cut is to pass more tax cuts.

This led to yesterday’s fight — a Democratic proposal to pass a $50-billion AMT fix and pay for it by canceling some of Bush’s tax cuts for the wealthy, or a Republican proposal to pass a $50-billion AMT fix by adding $50 billion to the national debt.

Guess how this turned out.

Trying to find a way out of a sticky tax problem, the Senate on Thursday voted overwhelmingly to prevent the alternative minimum tax from hitting millions of middle-class Americans without replacing the $50 billion that would be lost.

The move represented a bitter retreat for Senate Democrats who, in taking over Congress this year, pledged to pay for new tax cuts or programs rather than add to the federal deficit. But with Republicans refusing to go along, most Democrats joined them in endorsing a temporary fix of the alternative minimum tax without corresponding offsets rather than be held responsible for a surprise tax burden falling on 19 million taxpayers.

“This is not my first choice on how to do so,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, before the Senate voted 88 to 5 for his proposal. “This is my best choice on how to do so.”

Republicans, true to form, wouldn’t even let the fiscally-responsible version come up for a vote. It was either pass the tax cut without paying for it, or nothing.

One of these days, the Dems are really going to have to force the GOP to actually filibuster. These cloture votes got out of hand months ago, and now Republicans are just making a mockery out of the legislative process.

It’s worth remembering, by the way, that House Dems insist they won’t go along with an AMT fix that just goes on the national charge card, regardless of what the Senate wants.

This is even worse than watching sausage get made.

“One of these days, the Dems are really going to have to force the GOP to actually filibuster.”

sure, cb. sure they will. and hell will freeze over next week also.

  • If the Senate Republicans were trying their hardest to wreck the nation, how would their behavior be different than this? Let’s hope that the House Dems don’t cave in like the Senate Dems have.

    I can not understand why Harry Reid doesn’t require a real filibuster. I’m not a Senator, but I volunteer to occupy a cot in the Senate chamber over the Christmas break if that’s what it takes to beat these guys.

    If we have a Democratic president and a filibuster-proof Senate in 2009, how long will it take to heal the damage of this president and his puppets in Congress? (Yes, Mitch McConnell, I’m talking about you and your sheep!)

  • Don’t just blame the GOP on this one; the “Blue Dog” Democrats are revolting against Pelosi and Rangel. Apparently they are fine with clearing out the treasury for the super rich, but temporarily adjusting the AMT to keep it in line with its original purpose? Oh, heavens no.

    The “blue dog”s are perennially scared of republicans – it’s unreal…

  • Note how all the attention goes toward these AMT victims, who are relatively well off. They aren’t rich, mind you, but they are at the top of the middle class.

    On the other hand, the rules used to compute the percentage of Social Security income that is taxed aren’t indexed either. That’s because SSI is chump change for the well to do, so why fix that problem? It only hurts the little guy.

  • This AMT should be scrapped permanently. Intresting how it when it came out to make 155 familys in the country pay tax they were getting away with now because it is not conneced with inflation it now affects millions. Dont tell me that someone living in New England on $50,000 a year is relitevely well off prices have sky rockeded here. Have you seen the taxes we already pay up here and I pay alot of tax as it is.Ask these maga rich bastards who are only paying 15% or less. I dont want to be hit further by this ridiculous tax.

    republicans are arseholes and Democrats are spineless. This country needs a third party

  • Yeah, I’m going to have to go along with the Wapo on this one… (sadly). Democrats just don’t seem to be up for a fight at all. It’s a little disheartening.

  • “Senate Dems blew off their fiscally-responsible promises…”

    I guess that promise went to the same place as that 5-day work week.

  • Keano at least knows the facts. The fact that the AMT was originally designed to tax only 155 households but now taxes millions of them places Republicans on the right side of this issue. If the Democrats want to be fiscally responsible, they should cut spending. Repealling one tax and replacing it with another so we can continue to spend more money than we should is not fiscal responsibility. It is big government, something Bill Clinton proclaimed was over.

    This tax should be repealled or at the very least tied to inflation in such a way that it still only taxes the same proportion of households it was orignally meant to tax. To do anything else is dishonest. That is why republicans oppose a replacement tax. A replacement tax for a tax that never should have been. Maybe the government should stop relying on dollars it knows it should not be spending.

  • Flippin’ cowards.
    To fix the deficit, all they had to do was NOTHING.
    They insist on saving the upper middle class from having to pay for the junk Bush and Reagan bought on credit for the past 30 years.
    Then the cave on the offset of taxes to make the problem WORSE.

    X @ 8.

    They could have shifted taxes AND cut spending. It wasn’t either-or; nor should it be with the 9 trillion dollar debt we need to address.

  • You’ll never succeed in taxing the rich, as long as the people doing the taxing, are rich.

    This is exactly why we need public financing for campaigns. More ordinary folks in office, less rich assholes.

  • Seems to me that the AMT and the Estate Tax are in the same boat. Both created to “spread the wealth” and ensure that the “richest of the rich” give back to the system that made it possible for them to amass the wealth in the first place. Neither adjusted for inflation over an extended period of time. Both starting to cut deeper and deeper into the middle class.

    It seems like either both are wrong and should be adjusted, or both are fine and should be left alone. It isn’t entirely clear to me why significant numbers of people who want significant changes to the AMT also want the Estate Tax left alone. My best guess is that the number of individuals who are nearing the AMT cutoff are higher than the numbers of people who believe they are nearing death and might have their estate taxed. In other words this is more about what is best for “me” than what is best for America.

    Personally, I think both taxes should probably be adjusted to better reflect their original intended targets. Unfortunately this will significantly cut revenue. This leaves a few options, increase taxes elsewhere, cut costs somewhere, or a bit of both. If the choice includes increasing taxes elsewhere, then I suppose the options the 2 parties will prefer will be 1) increase an existing or create a new tax on the wealthiest because they are most likely to be able to afford it 2) increase an existing or create a new tax that spreads the burden across the entire population so everyone shares the load.

    Guess which party would prefer which option.

    Perhaps I’m just getting too jaded.

  • Make a plan. Articulate it publicly. Stick to it no matter what. Make a plan. Articulate it publicly. Stick to it no matter what. Make a plan. Articulate it publicly. Stick to it no matter what.

    After a while, people might even begin to believe that the Democrats are a) Telling the truth, and b) Willing to stand up for principle.

  • How can the Democrats keep a straight face while they are trying to “fix” the AMT. They intend to up the taxes on people who earn $200,000 or more, to help pay for the dollars they shouldn’t have collected in the first place.

    The original AMT was to make millionaires pay taxes. The $200,000 wage earner group, adjusted for inflation, are NOT a millionaires. The AMT fix does not require offsetting taxes. Fix it right. Cut spending, especially government defined benefit retirement plans.

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