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This Week in Washington – December 13, 2010

Today starts the race the finish line for the 111th Congress.  They can’t get out of town too soon.  With breaking news that the invidual mandate is unconstitutional, the big issues this week will be ObamaCare, taxes and the spending issues for the year.

The Senate is scheduled to continue debate on a motion to concur with respect to H.R. 4853, the vehicle for the tax compromise.  A vote is scheduled fro 3pm today and another is expected for tomorrow.  The Senate will have to take up and pass a spending bill this week before the end of the short term Continuing Resolution expiring at the end of this week.

The House has no votes scheduled for today.  The House is scheduled for 14 Suspension votes on Tuesday and 12 on Wednesday.  The House may take up the Continuing Resolution H.R. 3082 (if amended by the Senate) and the tax compromise H.R. 4853 later this week. 

Conservatives are wary of this tax compromise and many believe that conservatives can get a better deal in 2011.  Mike Gonzalez of The Heritage Foundation, my employer, argues over at The Foundry that upon further review, this deal has some problems:

When President Obama and Congressional Republicans first announced their tax deal early last week, our reaction was to hold our noses against its bad elements; on balance, we thought the extension of the current tax rates was laudable. Now, however, the full text of the bill has been released and we see all the bad things that were in the original deal. Meanwhile, liberals in Congress are walking away even from that deal, and are holding the country hostage to their hatred of those they call “the rich.” The tax cut deal, we now know, has been so freighted with liberal special interest tax giveaways that true conservatives cannot support it in good faith.

This debate exposes a failure of the left according to Gonzalez.

The blame for this state of affairs will be on the left. Tax rates will go up on all Americans on Jan. 1, hitting a country beset with 10 percent unemployment and a stagnant economy. It’s baffling that, two decades after the fall of the Berlin Wall, the left has held fast to its belief that penalizing success will somehow incentivize hard work and produce wealth.  If House Speaker Nancy Pelosi and Senate Majority leader Harry Reid engineer this massive a tax increase in a faltering economy, they will join two Republicans — Reed Smoot of Utah and Willis Hawley of Oregon — in the pantheon of economic fools. Before they do so, Ms. Pelosi and Mr. Reid should consider that history has still not forgiven their predecessors for the Smoot-Hawley tariff that led to the Great Depression.

Thankfully, the a new congress will make tax policy a priority item, unlike this congress obsessed with ObamaCare and regulating Wall Street.

Of course, the pain of an Obama-Pelosi-Reid tax hike would be somewhat lessened by the fact that they would hopefully be temporary. As Rep. Paul Ryan (R-WI) said on Fox News Sunday yesterday, the first order of business next month for the incoming Tea Party House of Representatives will be to undo the tax hikes the Lame Duck Congress may be about to pass this week. (We would have preferred to have seen that first order of business to be the repeal of Obamacare, but given the circumstances, throttling that unbearable act must move to the second spot.)

Senator Jim DeMint (R-SC) is right to say that the old saying “this is the best we can get” is a recipe for failure and terrible public policy.

We recognize that having taxes go up, and then down, will increase volatility, which never helps businesses, investors and families. It was that concern that led us to be initially open to the extension of the current tax rates, even though it was only for two years and was accompanied by other onerous measures such as a 35 percent death tax. All along we have shared the concerns of such friends as Sen. Jim DeMint (R-SC), who said in a Thursday speech at Heritage that the line “this is the best deal we can get” has been used to justify too many bad deals in the past. Now that we see what is in the full text of the bill, we have serious reservations even about the original deal. So just to be clear, what The Heritage Foundation wants is a plain extension of the current tax arrangements. Congress should have a straight up or down vote on full extension, including the AMT. It can have a straight up and down vote on the unpaid for unemployment benefits, too, if progressives want that.

This plan is expected to pass the Senate by Tuesday then go to the House.  The House may make further changes to the deal to modify the Death Tax.  If so, the Senate will have to vote again.  This bill is loaded with tax earmarks and Conservatives need to keep a close eye on this deal to see how much further to the left it will be pulled by the House.

Other items on the agenda are the New START Treaty in the Senate, repeal of “Don’t Ask, Don’t Tell,” and the DREAM Act (passed the House).  The only thing keeping these politicians in town is the end of year spending bill (Continuing Resolution) and this tax compromise bill.

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