Lame Duck Return

Congress is back in session today, with the days already dwindling for deal-making on a host of very political issues, topped by the Bush tax cuts, which expire at year’s end.

If you look at the calendar, Christmas is four weeks from Saturday.  So, even if lawmakers are in session Monday-Friday over the next four weeks (try not to laugh out loud), that’s only 20 work days.

To a lot of us, 20 work days might sound like a good chunk of time that one could put to good use.  That is true.

But when it comes to Congress and tough political issues, that’s just a drop in the bucket.

Consider the current income tax rates, the so-called Bush tax cuts.  When they were approved back in 2001, everyone knew that they would expire in ten years.

President Bush repeatedly called on Congress to make them permanent, but Republicans and Democrats ignored those calls.

So, if we’ve known for ten years that these lower tax rates were going to expire, what makes anyone think that a resolution on their future can be worked out before Santa takes flight from the North Pole?

Next, let’s look at federal estate taxes, also known as the “death tax” and/or inheritance taxes.

Also in 2001, the Congress approved legislation that phased out the estate tax.  And last year, it went to zero.  The catch is that next year, it returns with tax rates that were in place in 2001.

For the last ten years, lawmakers in both parties have talked about changing that plan and finding a long term solution to the issue.

Why should some big deal get struck in the next three and a half weeks on that issue?

Another item on the agenda is the Alternative Minimum Tax, which has been the subject of calls by both parties for elimination over many years.

But, because that would cost billions, the Congress keeps enacting a yearly “patch” which insures that the AMT doesn’t grab hold of millions of taxpayers each year.

It’s December, and SURPRISE!  Congress hasn’t acted yet on the AMT patch.

If Congress does nothing on that front, the AMT would hit an estimated 20 million taxpayers with higher tax bills for this year.

The AMT has been around in various forms since the Vietnam War.  Lots of people in both parties have said it’s time to abolish it.  But instead of that, every year the Congress waits and waits to act on a yearly patch for it.

Lawmakers also do the same thing on the package known as the “tax extenders,” which is basically a fancy name for a package of popular business and personal tax breaks that are – extended – for one or two years by the Congress each time they are considered.

Except last year, the Congress failed to approve that legislation.

So now, in the next three and a half weeks, lawmakers need to push that bill through the House and Senate.

If they don’t, then certain taxpayers and businesses will see their taxes go up next year.  This would be apart from the increase in federal income tax rates if nothing happens in the Congress on the Bush tax cuts.

They can solve that in December, right?  Well, last year they didn’t.

And then, there is the federal budget.  The current fiscal year started on September 1, and Congress has barely gotten any closer during that time to approving a dozen major budget bills.

There had been talk of a giant “Omnibus” budget bill, but that’s gone down the tubes as well.

Congress will have to extend a temporary budget plan this week.  The current one runs out on Friday.

Meanwhile, the deadline is even closer for long term jobless benefits, which start running out this week.  It’s happened several times already this year, as Republicans want budget cuts to pay for the extra benefits and Democrats do not.

The month of December could be Classic Congress – use a big holiday as a way to force action by lawmakers on  a variety of subjects, which otherwise might prove impossible.

That’s Congress at work.

Stay tuned.