via a special arrangement with Informa Economics, Inc.
Earmarks and estate tax language are just
two issues Democratic leaders face when lawmakers return
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lawmakers return from their Easter recess, a host of issues will confront
Congress, with the initial one being a conference report on the Fiscal
Year 2010 budget resolution.
The Senate adopted its $3.53 billion Fiscal 2010 budget
resolution Thursday night, 55-43, with no Republicans supporting the
plan and two Democrats — Evan Bayh of Indiana and Ben Nelson of
Nebraska — voting against it.
The House adopted its budget on a 233-196 vote earlier
Thursday with no Republicans voting for the proposal and 20 Democrats
The budget resolution is non-binding, but it does set the
parameters for considering tax and spending bills later in
the year. Aside from initiating the reconciliation process, it also
sets the cap on how much can be spent on the annual appropriations bills.
The House plan would provide $1.089 trillion in discretionary spending,
when adjustments are factored in. That is about $8 billion more than
proposed by the Senate budget, and $7 billion less than President Obama
Democrats are hoping to have a budget
deal done soon after Congress returns the week of April 20. Conference
negotiations will focus on whether to include provisions that would, like
the House plan, allow health care overhaul legislation move through the
filibuster proof reconciliation process and how much in discretionary
spending should be provided to the Appropriations panels to write the
12 annual spending bills.
The House resolution (HConRes 85) includes reconciliation provisions,
while the Senate budget (SConRes 13) does not.
Estate tax language victory. Republicans
scored a victory on the estate tax with the help of 10 Democrats (including
the six senators from Montana, Arkansas and Washington), which means Senate
Democrats are well short of the 60 votes they will likely need to enact
Obama’s estate tax proposal this year.
Background: Under current law the estate tax —
now with a top rate of 45 percent with an exemption of $3.5 million
per person — will disappear Jan. 1, 2010, and will return with
higher rates and lower exemptions in 2011 -- as of 2011, current law
would drop the exemption to $1 million and push the rate up to 55 percent.
The Obama administration wants to freeze the estate tax rate
at its current level and index the current exemption for inflation (compared
with the law as now written, that would cost $256 billion over the next
decade, according to the Joint Committee on Taxation), but Sen. Blanche
Lincoln (D-Ark.) proposed an amendment, adopted 51-48, that she worked
out with Sen. Jon Kyl (R-Ariz.), that adjusts the budget to accommodate
a 35 percent rate and an inflation-adjusted $5 million per-person exemption
on the estate tax -- from $3.5 million to $7 million for individuals,
and to $10 million from $7 million level for couples. It would also
lower the top estate tax rate from 45 percent to 35 percent. It would
create a deficit-neutral reserve fund that would require unspecified
revenue-raising offsets to cover the cost, which is estimated at $28
billion over five years and $85 billion over 10 years, according to
Senate Majority Leader Harry Reid (D-Nev.) spoke out against
the amendment, noting the amendment would benefit only 0.2
percent of estates owned by the richest Americans. Lincoln argued the
measure would benefit small-business owners and family farms and ranchers.
“We’re not protecting the super, super wealthy,” she
said. Senate Budget Chairman Kent Conrad (D-N.D.) criticized the $100
billion cost of the plan over the five years of the budget resolution.
“Where does the money come from? Either cutting from somewhere
else or raising taxes,” he noted.
Durbin amendment also approved. After adopting Lincoln’s
amendment, the Senate adopted, 56-43, an amendment offered by Sen. Dick
Durbin (D-Ill.) to create a point of order against any legislation providing
additional estate tax relief beyond what is assumed in the resolution
unless an equal amount of tax breaks are provided to those making less
$100,000 a year.
The estate tax budget vote, though non-binding, sets up a
debate on the contentious estate tax issue. “The rubber
meets the road when we bring up a tax bill through the committee and
the floor,” said Finance Chairman Max Baucus (D-Mont.). “That’s
what counts. All these votes here [on the budget resolution], they’re
important. But that’s not what’s most important.”
Some observers note that Congress might extend current law for one year
and include the estate tax issue with consideration of the rest of the
2001 and 2003 tax cuts, which expire at the end of 2010. Because this
approach would raise money compared with the budget baseline, it could
be a candidate for inclusion in budget reconciliation, which would require
just a simple majority.
Cap-and-trade anxiety. The
Senate budget debate also showed a lot of unease among some Senate Democrats
and many Republicans about President Obama’s proposal to implement
a cap-and-trade system for carbon emissions that would raise $646 billion
in revenue over 10 years. Senators from industrial states fret it could
cost jobs and cause their constituents energy bills to rise sharply.
Senate amendment: The Senate adopted, 65-33, an amendment
offered by Sen. Lindsey Graham (R-S.C.) to create a 60-vote point of
order against any legislation that includes any energy tax increases
that would affect individuals with annual incomes of $200,000 or less,
or married couples with incomes of $250,000 or less. Twenty-six Democrats
supported Graham’s proposal.
Comments: The budget bills
do not include provisions to deny direct payments to farmers
with more than $500,000 in gross sales and a cap of $250,000 on farm program
payments, two proposals pushed by the Obama administration and USDA Secretary
Democratic leaders said that finishing work on the FY 2010
budget to clear action on the next supplemental spending bill for the
wars in Iraq and Afghanistan and the regular FY 2010 appropriations
measures will top lawmakers' agenda following the two-week
recess set to officially begin April 6. Another focus this spring will
be on legislation to address the nation's financial crisis, including
measures to impose a new oversight and regulatory scheme and others
to stop predatory lending practices. “It will be about the budget
and the appropriations process and the financial crisis in our country,“
Pelosi said. “And we see them directly related.”
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