That pesky ‘sunset’ clause

April 18, 2006

The far-right [tag]Washington Times[/tag] had an otherwise skip-able article today about the White House staff, but there was one key gem in the piece that warrants attention.

Mr. Bolten joined Mr. Bush and other administration officials, including Treasury Secretary John W. Snow, yesterday at a business round table in Sterling.

Mr. Bush used the occasion of tax day, the due date for federal income taxes, to urge that his [tag]tax cuts[/tag] be made permanent. Because of Senate rules, many provisions are scheduled to [tag]expire[/tag] after 10 years.

“It’s tax day, and it’s a day to recommit ourselves to low taxes,” he said.

Tax cuts are scheduled to expire after 10 years “because of Senate rules”? Even by the Washington Times’ standards, this is absurd. The tax cuts are set to expire, not because of a procedural detail, but because Republicans on both ends of Pennsylvania Avenue designed them that way.

As Paul Krugman explained three years ago:

[I]n 2001, as now, some swing senators insisted on a budget resolution limiting the size of any tax cut. No problem. House-Senate negotiators pushed through a huge tax cut anyway, “saving” several hundred billion dollars by making the whole thing expire in the 10th year. Among other things, this “sunset clause” implied that heirs to large estates would pay no tax if their parents died in 2010, but would face significant taxes if their parents made it into 2011. At the time I suggested that it be renamed the Throw Momma from the Train Act of 2001.

Needless to say, the bill was silly by design. The administration didn’t intend to compromise: it fully expected to get the sunset clause repealed in a future Congress. And President Bush was soon out there ridiculing the way the tax cut was programmed to expire, implying that the expiration date was imposed by scheming liberals, when in fact it was a trick perpetrated by his own Congressional allies.

Of course, the Times no doubt received its spin from its Republican allies, which suggests this is likely to be a regular GOP talking point. Like far too many of their claims, this is completely false.

Memory of anything but slights is not a trait encouraged in Republicanite politicians.

Just another case of the conservative press lying and enabling lies.

  • Actually, I thought the sunsetting was due to a Senate rule (the Byrd Rule), which is quite arcane but it boils down to this:

    …any provision in a tax bill that permanently affects net federal receipts is subject to a “point of order” and can be struck from the bill. Since Republicans were unable to muster the 60 votes it takes in the Senate to waive a point of order, they chose instead to sunset all of the provisions in the bill after 2010.link

    So basically by adding the sunset provisions, the Republicans acknowledged the tax cuts would eventually increase the deficit on the very day they passed them.

  • On a closely related issue, having just gone through the annual tax dance and having had to check to see if the AMT hits my family, I wish to propose a new name for the AMT.

    ‘Reagan’s Tax’

    We should always refer to the Alternate Minimum Tax as ‘Reagan’s Tax’. He signed it into law. And we now see the wisdom of it, when revenues would be falling even further, Reagan’s Tax ensures that the Government gets enough money to hold Treasury Bound auctions to cover the rest of the deficit. And it did not really start to hit middle class Americans until Reagan was long dead and gone.

  • The elimination of the Estate Tax needs to be reframed as the “Paris Hilton Tax Cut”.

    Let’s see how long that lasts.

  • You know how it is, after like 10 years laws become “old laws” and are rendered quaint. Nobody has to follow them after that…

  • Dander has it almost right – and the Washington Times does have it right (can’t believe I just said that). Because of the tightness in the Senate, the GOP prefers to pass all sorts of things via the Budget Reconciliation route (of which the Byrd Rule is part). The Budget Reconcilation was specifically designed (in the 1980s I think) to be prevent crucial budget bills from being held up in Senate polticking – there is only a limited time for debate, amendments are either prohibited or severely curtailed, and most importantly, can’t be filibustered, i.e., only need a majority vote in the Senate. One of the catches to the whole format (the “Byrd rule”) is that any financial provisions passed in such a way can only last as long as contemporanious budget projections. I’m pretty sure that under Bush this budget projection window has since been reduced to 5 years, but at the time of the 2001 tax cuts it was still 10 years – so any tax cuts passed at the time via the Budget Reconciliation process, by Senate rules (and because they circumvent the normal process), had to expire after 10 years.

    Some observations:

    The abuse of the Budget Reconciliation process has become rather endemic under the Bush regime. Rather than craft truly bipartisan legislation that reaches out to as many people as possible, the Republicans prefer to use this process for all sorts of things (ANWR, anybody?) that are completely unrelated to the budget, relying on their own smallish majority to pass the Senate’s business. The Budget Reconcillation process inherently goes against what most of think are the ideals of the Senate – very little debate, consideration, or bill modification is allowed. The Senate leadership basically gets to say “take it or leave it”. A rather petty way to run Congress and “deliberate” the great issues of the day. But it’s par for the course with all the other GOP anti-democratic abuses of power.

    When you figure the GOP strategy in 2001 (the Reconcilliation Bill with the tax cuts was basically the last piece of major legislation that they passed before Jeffords defected and they lost the Senate), the idea of making the tax cuts “temporary” via Budget Reconciliation was a no-brainer, because they theoretically would have the entire remaining time during Bush’s tenure to solidify their Senate majority and then go back and make the tax cuts permanent at some point at their leisure under the normal process. It really does say something that here we are almost in mid 2006 and it still hasn’t happened. I don’t know if that’s the brilliance of Daschle/Reid or the ineptitude of Frist but it does say something about the GOP as a governing party.

    It also says something about the hypocrisy of George Bush that he goes around the country bemoaning the fact that the cuts aren’t permanent and that that adds insecurity to business planning, etc. and for that reason alone the cuts have to be made permanent – all the while hiding the fact from the public as to exactly why the cuts are only temporary – because the GOP slid through immensely huge, radical, and devastating changes to our fiscal policy via a legislative gimmick with little or no deliberation. That right there is the Bush years in a microcosm.

    And it says something about the press and the pundits that this process is being so abused – and the implications of this abuse on the body politic and our legislative system – and everyone pretends that they’ve never heard of it before and never calls the GOP on it. I remember watching in disbelief when Ed Gillespie (former head of the RNC) was on one of the cable networks on election night 2002 and the discussion turned to what the GOP was going to do with it’s new Senate majority and someone mentioned several issues including ANWR that probably would be passed bia the Budget Reconcillation process and Gillespie went into this whole thing about it being some “arcane” legislative rule that was barely used and that nobody outside of longterm denizens of the Congress had any idea what it was. And everybody else on that stupid panel just glazed their eyes over, agreed with him and changed the subject.

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