Why Democrats Can't Use Reconciliation for Tax Cuts

[Clio the Leo]

Why Democrats Can't Use Reconciliation for Tax Cuts

My colleagues like to ask me questions about obscure and not-so-obscure congressional budget procedures. This week, folks are wondering whether reconciliation could have been used by Democrats to pass a bill extending the Bush tax cuts for only the middle class.

<snip>

1. No more room at the inn. Reconciliation is only available to be used when the congressional budget resolution expressly includes reconciliation "instructions." The fiscal year 2010 budget resolution did include such instructions, allowing Congress to use reconciliation protection to package savings from health care and college loan programs. Reconciliation thus cannot be used again as a vehicle for passing an additional bill this Congress (though there seems to be some debate about whether the original reconciliation instructions might still permit tax cuts to be squeezed into a second reconciliation bill).

2. No budget, no reconciliation. Democrats opted against passing a congressional budget resolution for fiscal year 2011 (the fiscal year that began Oct. 1). Failure to act on a budget resolution (in part because Blue Dogs and some other Democrats were apparently loath to cast votes for it) foreclosed the creation of a new reconciliation bill for the extension of middle class tax cuts.

3. You can't step into the same river twice. Democrats' dissatisfaction with GOP use of reconciliation for tax cuts led House and Senate Democrats in 2007 (reaffirmed in 2009) to change House rules and Budget Act provisions to prevent future majorities from using reconciliation to shield tax cuts from a filibuster. Absent 60 votes, majorities must offset provisions that increase the deficit. The changes also made it more difficult for future majorities to comply with the Budget Act by making tax cuts expire at the end of the budget window. In other words, the trick of ending all the Bush tax cuts in December 2010 to make the bill appear revenue neutral within the ten-year budget window that ends this month can no longer be played. This of course is problematic for anyone seeking to use reconciliation to pass only middle class tax cuts. Those cuts would have to be paid for.

http://www.themonkeycage.org/2010/12/w.html

[Beetwasher]

1. BULLY PULPIT!!!!!!!

LEADERSHIP!!!!!!

[rfranklin]

2. After the cow left, they shut the barn door, now they can't get out...

Can they screw it up any worse?

[The_Counsel]

3. Perhaps the Dems Should Have Used a Different Plan...

...once back in power, put things right using the same rules the GOP abused previously.

The GOP would have gone out of their way to change the rules once they weren't working in their favor.

As it is, the Dems worked hard to get a majority only to hamstring themselves once back in power.

Wanna know why they couldn't get any Dem voters excited in time for 11/2? There ya go...

[shraby]

4. They would be paid for by the expiration of the top 2% .

[Igel]

5. That money can only be used once.

You forget, the expiration of the tax cuts is law. It's built into the baseline budget assumptions. Letting them *all* expire gets you $0 in either direction, so letting just the tax cuts for families earning >$250k expire gets you something like 30% of $0.

It's the same kind of problem that makes the government-backed student loan rewrite not officially save any money. The savings from the student loan bill were part of the health-care reform act.

In any event, the middle class tax cuts "cost" more than the cuts for families earning over $250k (and the corresponding single income family--what's that, $125k?).