US Senate: Defenders of about 0.3 percent of the population

News on the Senate vote on various Democratic Tax Plan compromises has just come through on The Hill and Memorandum. Two plans were introduced for votes.  Both failed.

United Senate Republicans joined a small handful of Democrats on Saturday to defeat a pair of proposals to extend some of the 2001 and 2003 tax cuts signed into law by President George W. Bush.

Voting nearly identically, the Senate twice failed to meet a 60-vote threshold necessary to move forward on both proposals. Meeting in a rare Saturday session after agreements fell through for a Friday vote, the results were widely expected. They were also somewhat premature, as the White House is still negotiating with congressional leaders on an alternative compromise proposal.

The first proposal by Finance Committee Chairman Max Baucus (D-Mont.) would have extended the cuts only for individuals with incomes of up to $200,000 and families with incomes of up to $250,000. That failed by a vote of 53-36, with all GOP senators in opposition as well as Democrats Russ Feingold (Wis.), Joe Manchin (W.V.), Ben Nelson (Neb.) and Jim Webb (Va.).

The second proposal by Sen. Charles Schumer (D-N.Y.) would have extended the 2001 and 2003 tax cuts permanently for incomes of up to $1 million, among other provisions such as a one-year extension of unemployment benefits and cuts in capital gains, estate and dividend taxes. That failed, 53-37, with Sen. Tom Harkin (D-Iowa) joining the ‘no’ votes.

The Schumer Bill was referred to as the “Millionaire’s Tax” since most of his provisions applied to only about 0.3 percent of the population.  Both plans essentially extended tax cuts to 98% of the population.  Meanwhile, Mitch McConnell referred to the votes for both plans as “theatrics”.  This is because Republicans had already signaled their intent to filibuster both plans.  Patricia Murphy, writing for The Capitolist at Politics Daily, had this analysis.  I bolded the last sentence to give you an idea of how well negotiations appear to be going.

As Democrats and Republicans continue to spar over the issue, time is running out for them to find a solution. If Congress fails to come to an agreement before the end of the year, rates for all Americans will return to 2001 levels when the Bush-era policy expires on December 31st. In addition to income tax hikes, the changes would increase the estate tax, the marriage penalty tax, taxes on dividends and capital gains, and the Alternative Minimum Tax.

While Democrats pushed their floor votes this week, a bipartisan group of senators and House members met behind closed doors with the Obama administration to hammer out a compromise on the tax issue. Vice President Joe Biden, filling in Saturday for Obama in the White House weekly address, made no mention of the negotiations, but said if the tax cuts aren’t extended “millions of middle-class families will see a big bite out of their paychecks starting Jan. 1. And that’s the last thing we should let happen.” Obama, speaking later at the Eisenhower Executive Office Building, said he was “very disappointed” that the Senate had not approved the tax bill. Continued Tax relief for the middle class should not be held “hostage” by those supporting an extension of the lower rates for high income Americans, he said.

Media reports indicated late last week that a deal had been reached to pass a two-year extension of all the tax cuts, along with a one-year extension of unemployment benefits, and the also new START nuclear arms treaty. But senior Senate aides familiar with the negotiations tell Politics Daily that Republicans feel little pressure to give in to Democratic priorities when they feel confident they can prevail on the tax issue without concessions.

It seems evident to me that the US Senate is willing to play political games with ordinary people’s lives.  The Republicans appear to want to hold START, unemployment extensions, and the tax cuts for the majority of Americans hostage as they represent the interests of the very few uber wealthy and seek gridlock for their own power agenda.  The Democrats have been out maneuvered once again.  A year ago, this predicament would have been thought unbelievable.  If you think it’s bad now, just wait until the jr. senators from Kentucky and Illinois enter the chamber.


31 Comments on “US Senate: Defenders of about 0.3 percent of the population”

  1. HT says:

    I am speechless – that these ivory tower dilettantes would play chess with the fate of the most vulnerable in society in equivalent to vultures sitting on a tree branch waiting for their prey to die. Most politicians really are the scum of the earth. And how about those m/billionaires who have advised the government to tax them more? Why are they ignoring their plea, or was it an empty gesture because they knew it would never happen?

    • dakinikat says:

      It seems to me they are so caught up in the game and the power plays, they just have overlooked the obvious connection to real people.

      • Minkoff Minx says:

        Exactly, the politicians disconnect with the “Average American Public” is revolting. I mean, historically…politicians and the like were mostly from the elite class. But even then they seemed to fight for the little man…FDR, Eleanor Roosevelt. Now it seems the politicians are so overtly consumed with there own agenda, and making sure they even more rich in the process.

  2. Sima says:

    I sometimes wonder if there’s not a people’s mole in the Senate, screwing crap up to give the little guys a chance (this is not directly about the tax cuts boondoggle).

    For example, the ‘food safety modernization act’ which they passed early this week (S. 510) is actually unconstitutional because of an ‘error’.

    http://tpmdc.talkingpointsmemo.com/2010/12/fail-dems-unconstitutional-mishap-could-kill-food-safety-bill.php

    At first I thought, yep, there’s Reid at work. What a stupid, but fortuitous for my side, mistake.

    Then I read this ‘An Error by Dems May Allow the Lawsuit Against Health Care Reform to Succeed’:
    http://tpmdc.talkingpointsmemo.com/2010/11/conservative-suit-against-the-mandate.php

    Who’s advising these Senators and Congress people? Why don’t they understand basic Constitutional Law? After all, they’ve got a Professor of such leading them :P. Is some peon deliberately sabotaging these bills?

    I’m assuredly reading way too much into these mistakes. But, the mistakes are at least a pathetic comment on the education of Dem politicians and staff into the laws and Constitution that make up our government.

    • Sophie says:

      Y’know Sima, I think all the bills have such errors, even the ones that pass. I think they only get “found” in the things that Republicans don’t like, because Republicans are willing to fight against things they don’t like whereas Democrats pretty much do some hand-wringing and call it a day.

      To say I am disappointed in that food bill is the understatement of the year. We do need food safety, but we’re not going to be any safer thanks to the biill. Even the Tester amendment–once you read the fine print–screws the small farmer (and therefore the consumer). It turns that in order to grow and sell 20 heads of lettuce a year from your own back yard, you have to get a permit first to get permission to be exempt from the other paperwork!

    • Dario says:

      Hmm…

      “If there were a severability clause, it would mean that the court could strike down a particular provision of the law, and the rest of the law would remain in place,” says Timothy Jost of Washington and Lee University. “[However] since there is no severability clause, it does not necessarily mean that if the court strikes down a particular provision the rest of the law collapses…. the normal rule is that partial invalidation is the required course.”

      There’s a good reason the HCR has no severability clause because the most contested item would be the mandate, and the Democrats want to kill the the whole bill if the mandate is thrown out. Nobody forgot anything.

    • Aerio says:

      The bill isn’t unconstitutional. That’s just what one staffer leaked. The revenue raised is incidental. The primary function of the bill is not revenue. Plenty of similar laws have been upheld in the past.

  3. Sima says:

    Another link of interest about Senate procedure:

    Senator Michael Bennet (D-Co) was caught on mike proclaiming the whole process of the lame duck session was rigged during the debate over S 510.

    http://www.naturalnews.com/030585_lame_duck_session_Senate.html

    We all knew it. Now we know they know it, and acknowledge it, too.

  4. Pilgrim says:

    Why would Senator RUSS FEINGOLD vote against the bill?

  5. Sophie says:

    Regarding the tax cuts…I wish the Dems had the brass to let them all expire rather than be held hostage to the 0.3%.

    • dakinikat says:

      I’m actually of that opinion too except it would probably not be good for the economy right now. So, I’m torn between my political opinion and my thoughts as an economist.

  6. fiscalliberal says:

    China has been making comments regarding the political will of the Unitied States to address its deficits and debts. We want to prosecute elective wars and not pay for them. We want to provide major militry bases in Europe, Japan and Korea to protect other people. 40 cents of every dollar spent is borrowed.

    Do I understand it correctly that this is a filibuster and no one is standing in the well of the senate filibustering. If our Democratic friends need to make a point, we should see Republicans standing in the well for days, filibustering. Todays action is meaningless unless they stand up for tiheir principles.

    We need to remember that in historical war times the marginal tax rates were much higher to pay for the wars. Now days we borrow money to fight wars.

    Now comes the real test – will the Democrats let the tax cuts expire to pay for the incompetence of the Republicans who had the presidnecy, senate, house and the supreme court for 6 years when all of this nonsense transpired. Will the churches set up the soup lines which are the result of the financial mismanagement of the Bush administration.

    WILL WE HAVE THE LEADERSHIP FROM THE PRESIDENT TO STAND UP LIKE FDR DID AND POINT OUT WHY ALL OF THIS IS HAPPENING.

  7. fiscalliberal says:

    DAK – can exonomists provide empirical evidence that tax cuts in recessions work?

    Also – do we have to worry about foreign purchasing of our debt if the FED can print money to finance this nonsense. I heard a comment last night that as long as we are the worlds major currency, we can. Long term we will not but maybe short term we can.

    • Pilgrim says:

      When other countries start buying the currencies of countries other than the united states, then the usd may not continue to be the “world’s major currency.”

      Russia and China have alredy made a pact to trade in each other’s currencies.

      I’m no economist. Dak is. She may have more reason to be confident of the “world’s major currency” continuing to maintain that status, and for how long.

      • dakinikat says:

        It’s been losing its position really since the Nixon years and all that inflation. The Yen encroached on it at that time. Now the Euro is encroaching as well as the Chinese RMB. I’m not sure that’s completely a bad thing in economic terms. I think most of the issues with that happening are more geopolitical and I really can’t speak to that with any authority.

    • dakinikat says:

      Yes, there’s plenty of evidence it works. It’s not as strong as increased government expenditures because the multipliers are smaller. Both stimulate aggregate demand which is the problem right now. With direct government purchases, the first round of expenditures goes out 100%, with tax cuts, it’s diminished because a portion of the expenditures goes to buying exports of other countries, paying taxes, and savings. It’s much more diminished than it used to be because of the increasing purchase of exports. There’s also evidence right now that savings is higher than normal. That’s why spending multipliers are higher right now that tax multipliers. Does that make sense at all?

      • fiscalliberal says:

        Regarding evidence – I wonder if there is any differentiation of normal versus depression times. First of all you have to be making money to stimulate aggregate demand with cuts. However in a recession / depression the motivation is to save. When the senior payouts came recently, our money went right into the bank versus going out to spend. We shall see how the recent unemploymnet increases affect christmas spending. Becky Quick ( my favorite gal untill DAK cane along) said Friday, that this was now a major concern.

        I maintain the rich put their money in the Cayman Islands.

        The topic is very complex and this blog is one of the few where the concepts can get hashed out. Nothing on TV tonight so we might as well solve the worlds problems

  8. fiscalliberal says:

    I googled Bush Tax Cuts and found a Christian Science article dated in Oct, but it geves a pretty good summary of what would happen if cuts were not extended.

    http://www.csmonitor.com/USA/Politics/2010/0913/Bush-tax-cuts-101-What-changes-could-be-in-store-for-taxpayers

    They have some exellent charts in terms of who benefits under the scenario’s

    I am still looking for empirical evidence that Bush Tax cuts work

  9. Name: Mark says:

    Would Harry Truman have done this? I understand that there always, in the end, has to be a compromise, and that liberals are never, ever going to get all that they want. That’s the nature of politics. The problem is that Obama is not pulling out all the stops to get the most progressive final deal possible. He’s not out there on the stump giving the Republicans heat for their unpopular positions. I think that both Carter and Clinton, moderates though they were on domestic policy, would have fought harder for, and achieved, a more progressive final settlement had they been faced with a situation like this.