I am also troubled that this package makes the tax code permanently temporary " and falsely assumes that we will be able to achieve a different outcome in two years' time.
The cover of today's (12/14/2010) Wall Street Journal points this out, in a story "'Temporary' Tax Code Puts Nation in a Lasting Bind." The piece opens: "Welcome to the world of the temporary tax code."
A main argument being used in support of this temporary extension is that it is the only proposal we can get the Republicans to agree to. But I am concerned that this framework will make it more difficult to muster the political courage to reduce the deficit when these tax provisions again expire in two years.
The reason? Democrats are trying to ensure that all but the wealthiest 2% of taxpayers do not see their taxes go up on January 1. But we are told that Republicans are willing to accept tax increases on middle class Americans in order to protect the very highest income Americans. And so, the logic goes, while we don't agree with Republican demands, their willingness to punish 98% of Americans to get their way gives us no choice but to accept this quote "deal."
Frankly, that argument assumes a less generous view of our Republican colleagues than I am willing to embrace. I agree with President Obama that neither Democrats nor Republicans want to see taxes increase on January 1 on the overwhelming majority of Americans. To avoid that result, I believe Republicans would be willing to support a more responsible tax proposal along the lines of the tax proposals put forward by Senators Baucus and Schumer that I voted for last week. Those proposals would have shielded all families from any tax increase on their first $250,000 or $1 million in income. The fact that not a single Republican supported either proposal results from their expectation "apparently accurate" that if they remained intransigent, Democrats would give in to their demands. But those demands, reflected in the bill now before us, do not acknowledge the serious problem of the deficits. Retaining Bush tax rates on income over $1 million, reducing the estate tax to the level it was in 1931, and continuing the full ethanol subsidy of 45 cents per gallon are examples of provisions that do little to stimulate the economy but abdicate our responsibility to address our dangerous deficit. Some say that in two years, when the economy has recovered, we will be able to stop another extension of the Bush tax cuts for the wealthiest income Americans. I question the wisdom in that argument. Having achieved all of these wishes now will only embolden the Republican minority to adopt a similar hard line stand on extending the Bush tax cuts when the issue arises again in two years.
Failing to extend provisions with proven effectiveness merely because they were originated with the Recovery Act is terribly misguided.
Finally, I wish to note my deep disappointment with political posturing that has led to the cancellation of nearly every innovation under the Recovery Act. Even though it is the largest revenue measure to be considered in the 110th Congress, this package was negotiated behind closed doors. And I am informed that the Republican leaders demanded that no provision enacted under the Recovery Act be extended. Now I can understand that certain Recovery Act provisions might not warrant extension. But this opposition is purely political, driven by a desire to deny merit to the Recovery Act, which added 2.7% to third-quarter GDP growth and raised employment by 2.7 million to 3.7 million jobs. And so the package chokes off the Build America Bonds program, which has provided crucial support for municipal governments during a period of sustained challenges in raising funds to meet infrastructure needs. The package also ends a provision that Senators Crapo, Grassley, and I fought to include in ARRA, which raises the bank qualified limit, last adjusted in 1986, for small municipalities that sell debt to community banks " and which has significantly reduced rural governments' borrowing costs while creating jobs and needed infrastructure improvements for thousands of communities.
And because of the other side's reflexive anti-Recovery Act position, this bill relies intentionally upon outmoded, ineffective incentives for clean energy deployment. We fail to extend the advanced energy project or 48C credit, which allows qualifying companies to claim a credit for 30% of the cost of creating, expanding, or re-equipping facilities to manufacture clean energy technologies. The credit's vast oversubscription is a powerful demonstration of the potential for clean energy manufacturing in our country. But it, too, is allowed to die " which is all the more appalling given that the ethanol blenders' credit is extended again at 45 cents, even though the House negotiators and industry reached a consensus on reducing the credit by 20%. Had we done the same, we could have used the savings to implement a suite of energy incentives that would dramatically improve energy efficiency, reduce emissions, and enhance domestic manufacturing competitiveness. And I have filed an amendment with Senator Snowe to do just that. Unfortunately, this bill is closed to amendments.
In spite of its positive provisions to strengthen the economic recovery, the bill moves us in the wrong direction with regard to our other major problem of budget deficits. On that issue, it will start the 112th Congress off on the wrong track. For those reasons, I oppose going forward with this bill.
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