Off

At its heart is a two-year extension of all the tax breaks Americans are used to; sales tax relief in States that have no income tax, the estate tax, out-of-pocket expenses for teachers, child tax credits, and a slew more that no one seems to mind. But it's extending that income tax break for high income Americans that seems to be caught in everyone's craw.

The House this week agreed to it's own version of tax legislation but after the vote the Speaker announced that the Obama/Republican plan will not pass the House this year.

That plan extends the breaks for two years, provides unemployment insurance through the end of 2011, cuts payroll taxes by 2%, and assures Senate passage of the Strategic Arms Reduction Treaty.

The actual increase for those high earners would be about 3% but opponents are having none of that. The argument from several corners, the experts on such matters, seem to conclude that increasing taxes during a recession is risky to the extent that during this slow recovery such an increase will tip the economy back towards recession. But is it true? It seems that the $700 billion or more the extensions will add to the deficit should be enough to question the pundits.

But the tax breaks, underwhich we have been living since 2001 and 2003, have stopped stimulating the economy and are not likely to change now. The economy is returning slowly as it should, there is a strong market for US debt, and the US is invested in the debt of other countries. The tax breaks can't do much immediate harm. The real risks comes later when things are better and Congress is challenged to extend the payroll tax holiday or further reduce employee contributions to Social Security through their payroll taxes. Social Security is strong for another 30 years or so. Reducing payments now and possibly continuing those cuts later puts that trust fund at risk sooner.

Logically, taxes are revenues, the country is in significant debt; should we be cutting our revenues at such a time? Perhaps it is worth a try, but the payroll tax? A good idea if done grandly about five years ago and then stopped when it no longer stimulated. Not a good idea to reduce the trust fund when thousands are retiring daily.

R. McElroy

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Historical Highlights

from the Clerk of the US House

The “Comebacks” of the 64th Congress

December 05, 1915

On this date, as the House began to organize itself at the opening of the 64th Congress (1915–1917), a monumental number of former Members were sworn in as returning Members.

Nearly one-third of the opening day roster had not served in the 63rd Congress (1913–1915). One hundred nineteen were true freshman, most of whom were Republicans who picked up a large number of seats in the midterm election. Another 22 were Members who had lost re-election in 1912.

Most of this unusual group were Republicans who had been turned out of office in a tumultuous three-party election that catapulted the Democrats to a more than 60-seat gain in the House and propelled Woodrow Wilson to the White House.

Collectively known as the “comebacks,” these 18 Republicans and four Democrats included many former House leaders and rising stars: former Speaker Joe Cannon of Illinois, future Speaker Nicholas Longworth of Ohio, former Chairman of the Expenditures in the Department of the Treasury Ebenezer Hill of Connecticut, and future Majority Leader John Q. Tilson of Connecticut.

When “Uncle Joe” Cannon lost his campaign for re-election to the 63rd Congress (1913–1915), he commented that it was not wise to speak out against the opposition after an election because there was always the possibility of mounting a comeback. In 1912, he had noted, “I am satisfied to keep quiet.” Cannon’s predication proved correct; in his case, after winning re-election in 1914, he would serve a total of four more terms in the House.

The “comebacks” were extended courtesies that the freshmen were not. For instance, the Democratic committee chairmen of both the Ways and Means and Labor committees made concessions to help ease these House veterans’ return to their former committee assignments—though they did not regain their seniority. Moreover, fellow Members from both sides of the aisle warmly greeted the “comebacks” on the opening day of the new Congress, before the House got down to business—as more than new 2,000 bills were introduced before the end of the legislative day.##