We should have known. We should have known that the pork fueling the legislative process in our Capital would not be purged from the system. We should have known that the shady deals would still be made. We should have known that the good-ole-boy system wouldn’t go away. We should have known that the power of greed would muscle its way back onto the Hill. We should have known that they wouldn’t change even after the November elections. We should have known that the “right thing” is a concept they do not understand in Washington. We should have known that it was too good to be true. We should have known . . .
At first blush, the Tax Extension Bill looks to be a good thing because it will delay an increase in the income tax rates. According to the conservative argument, the tax cuts will lead to investments the creation of jobs. There is a problem with that logic however . . . there is no tax cut. If passed, the measure will only serve to maintain the current tax rates, not lower them. So then, what leads them to believe that businesses will be incentivized by the Tax Extension to create more jobs if the tax rates simply stay at current levels?
It won’t and they know it. But an argument of economic stimulation had to be developed in order to counter the liberal assertion that taxes have to be raised in order to pay down the deficit – or in English we all understand – to finance the huge social entitlement programs passed over the past couple of years. So, Boehner and company put together their own propaganda that suggested an extension of the “Bush Tax Cuts” would create the capital needed for investment and jobs creation. And, it worked but not without cost.
In order to gain the votes necessary to pass the legislation, concessions had to be made. Oh, no concessions were made to the broad tax extensions – no taxpayer will see an increase in income tax rates – but there are some significant additions to the bill. It’s classic pork barrel politics. It’s the kind of politics that got us into the mess we’re in. This will not help us dig out. Here’s a list of the bill’s pork riders:
- A 13 month extension of unemployment benefits. The folks who will be receiving these benefits have already been on the federal dole for 99 weeks. That’s 2 years folks. Now they’re talking about extending unemployment benefits for another year.
- Reinstatement of the “Death Tax”. The exact provisions of this aren’t settled yet but it means that estates worth $1m or more will be taxed at a minimum rate of 55%. Take a look at the farming industry and you’ll see just 1 example of why that’s a bad idea . . . there just aren’t many family owned farms out there anymore.
- Cash grants for wind and solar projects. This is secret code for “make your friends and relatives rich”. The Carnahan family in Missouri was beneficiary to a $107m grant for a controversial wind power farm project.
- Tax credits for energy-efficient appliances. This is Cap and Trade “creep”.
- Favorable tax treatment for mass-transit benefits for employees. See above.
- A one-year extension of a 45-cent-a-gallon tax credit for fuel made from ethanol. Same.
But that isn’t all folks, according to a report from “The Hill” the full tax extension bill hasn’t even been written yet. Read about it here . Harry Reid is said to be lobbying an effort to include his gambling initiative (legalized online poker) in the tax extension bill. The Senate has taken a preliminary vote and theoretically passed the bill without it even being written yet.
There’s also some talk bouncing around that the GOP is putting together their own version of the DREAM Act. This is the “new” crew we voted into office last month. Stay tuned . . .