Harkin, Grassley vote to advance tax cut deal

Iowa’s U.S. Senators Tom Harkin and Chuck Grassley were among a large bipartisan majority that voted to advance a bill to extend unemployment benefits, the Bush tax cuts and various special tax breaks and credits. The Senate passed the cloture motion by a vote of 83 to 15. Just 10 members of the Democratic caucus and five Republicans voted against cloture for various reasons. A handful of senators who voted for cloture may vote against the bill itself, but the bill will pass easily.

The Los Angeles Times summarized key points in the Senate’s version of the deal President Barack Obama negotiated with Republican leaders in Congress:

The package extends the Bush tax cuts for two years on families at all income levels, including the wealthiest 2% who have incomes above $250,000 a year. Obama once campaigned against tax cuts for those earners.

The package also continues unemployment insurance through 2011 for up to 7 million Americans who otherwise would see their extended jobless aid expire.

One key change for most taxpayers will be a 2-percentage-point reduction in payroll tax worth up to $2,000. It replaces the so-called Making Work Pay tax cut for 95% of Americans, a break that expires Dec. 31.

The package also reinstates the estate tax that lapsed this year under a quirk of law. It establishes a 35% rate on inheritances above $5 million for singles and $10 million for families. […]

[T]he Senate added $10 billion in energy assistance, including nearly $5 billion in ethanol and coal credits that environmentalists oppose. But it also included an extension of grants for renewable energy developers, which supporters credit with having doubled solar plant production in 2010.

The package also includes a long, $55-billion list of specialty tax breaks that tend to be extended each year – help for Puerto Rican rum makers, racetrack developers and Los Angeles film producers.

I don’t have time to list all the shameful aspects of this deal tonight, but I discuss seven big problems after the jump. UPDATE: I recommend Rortybomb’s post on “who got what” in this package.

1. The bill does nothing, as usual, for the growing cohort of “99ers,” who have exhausted all their federal unemployment benefits. Long-term unemployment is at levels not seen for many decades, but Congress does nothing for those who have been jobless for the longest time. Almost nothing the federal government could do would stimulate the economy or improve beneficiaries’ quality of life more than creating a tier of unemployment benefits for the 99ers. Obama never asked Republicans for that, nor did Senate Democrats insist on it.

2. Most of the good provisions in the deal (extensions of some unemployment benefits, renewable energy tax credits, transit commuter benefit, etc.) will happen for just one year, but the wealthiest Americans will get their tax cuts and estate tax break for two years. That’s bad for political and economic reasons.

3. In effect this deal negates any chance of letting the Bush tax cuts lapse, ever. Two years from now Obama will be facing re-election with a Republican-controlled House and a Senate with smaller Democratic numbers. The economy is likely to remain weak. Anyone who believes that the president will stand firm against further extension of Bush tax cuts is delusional.

4. The lowest-income workers (single people earning less than $20,000 a year and families earning less than $40,000) will be worse off with the two percentage-point payroll tax reduction than they would be with the Making Work Pay tax credit it replaces. So the working poor are asked to sacrifice while the wealthiest people in the country get everything Republicans want for them.

5. Middle-income federal employees will face a two-year pay freeze (in real terms, a pay cut) in the name of deficit reduction, while the wealthiest Americans are not asked to sacrifice one penny to lower the cost of this $858 billion bill.

6. The one-year payroll tax reduction will lend momentum to efforts to defund and destroy Social Security during Obama’s presidency.

7. The deal doesn’t include a promise by Republicans to raise the debt ceiling next year. Republicans will probably seize that opportunity to impose big domestic spending cuts, which will be a drag on the economy and (in all likelihood) will harm some of the better programs the last Congress funded.

I know this package will save me money, because I won’t be donating to any future campaign of any Democrat who supports it. I’m disappointed to see Tom Harkin vote for this disgrace to the Democratic Party. Probably Iowa’s Democrats in the House will go along with the program too. UPDATE: Sounds like Leonard Boswell will be a yes vote.

DECEMBER 14 UPDATE: Harkin released floor remarks that sharply criticized the tax cut deal and indicated he will vote against the bill. A handful of other Democrats who, like Harkin, supported the cloture motion to move the bill forward are also expected to vote against it.

Share any relevant thoughts in this thread.

The only positive thing I can say about today in Washington is that Obama signed the Healthy, Hunger-Free Kids Act into law. Harkin was a key architect of that bill. Here’s his press release with details on its provisions:

Harkin press release of December 13:

Harkin Joins President Obama for Signing of Child Nutrition Bill

WASHINGTON, D.C. – Senator Tom Harkin (D-IA) today joined President Obama, First Lady Michelle Obama, Speaker of the House Nancy Pelosi, other Congressional leaders and students as President Obama signed into law the Healthy, Hunger-Free Kids Act, the child nutrition legislation that recently passed in Congress.  Harkin, as a senior member of the Senate Agriculture, Nutrition, and Forestry Committee, played an active role in shaping the legislation.  In particular, he worked to include a provision that would require the Secretary of Agriculture to set nutrition standards for all foods sold in schools participating in the National School Lunch Program.  For over a decade, Harkin has introduced legislation to that end.  

“Right now we are fighting two food related epidemics in this country – we have rising rates of diet-related chronic disease, such as diabetes, heart disease and cancer, while at the same time many families cannot afford to provide their children with consistent, healthy meals.  The Healthy, Hunger-Free Kids Act will go a long way in ensuring that not only do our kids have enough to eat, but that they receive food that points them toward a healthier, brighter future,” said Harkin.  “I am especially pleased this bill will put into place common-sense nutrition standards for the foods and beverages sold in schools.  With this provision, the bill will help make the healthy choice, the easy choice – supporting the efforts of parents who work so hard to feed their kids nutritious meals and who do not want these efforts undermined when their kids go to school.  In fact, we know that it’s the choice that parents around the country prefer – survey after survey shows that parents support school nutrition standards at school that reinforce the healthy choices that parents try to make for their kids at home.”

This fiscally responsible and bipartisan Healthy, Hunger-Free Kids Act reauthorizes the nation’s major Federal child nutrition programs administered by the U.S. Department of Agriculture (USDA), including the National School Lunch and Breakfast Programs, Special Supplemental Nutrition Program for Women, Infants and Children (WIC), Child and Adult Care Food Program and Summer Food Service Program.  The bill provides $4.5 billion in additional funding over the next 10 years – nearly ten times the amount of money provided for the previous child nutrition reauthorization, and the largest new investment in child nutrition programs since their inception.  In addition to Harkin’s provision on school nutrition standards, major provisions of the bill include:

• The first reimbursement rate increase to improve school meal quality in 30 years.

• Increased use of direct certification to simplify school meal participation.

• Community eligibility provisions that will make it easier for schools with high proportions of low-income children to offer universal  meal service.

• A provision to reimburse after school programs for serving a meal, which is especially important for families in which the parents work non-traditional hours.

  • Substance-wise

    I largely agree with you on this.  And I think we have established our differences on the politics of this whole thing.  

    Regarding this issue coming up in two years, I actually see some real benefits to Democrats and Obama.  Going into the 2012 election, this issue could be an excellent way for D’s to call R’s bluff when it comes to any seriousness about tackling the deficit.  And if R’s want to make defending high-income tax breaks their rallying cry going into the election, be my guest!  – Of course, two years is a long time and lots can happen…

    • it "could" be

      if Obama had the guts to fight Republicans two years from now. I think the economy will still be weak enough that Obama will be a prisoner of the current beltway thinking (we can’t afford to raise anyone’s taxes). Not that that’s preventing him from raising taxes on single people earning less than $20K and families earning less than $40K…

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