Speaker Boehner’s Latest Gimmick December 11, 2011

Yet again the United States Congress is approaching crucial deadlines before which it must act in order to prevent devastating consequences from resulting. After averting a government shutdown by mere minutes in April, avoiding a default on its Treasury bonds in August, the federal government is once again on the edge of an abyss. This time the issues at hand are whether to re-extend a host of provisions that expire at the end of the year, and how to pay them. The expiring payroll tax cut, the expiring “doc-fix” which temporarily appropriates money to pay Medicare doctors, and the expiring unemployment insurance provisions are the main provisions at stake. Cue the political brinksmanship, backroom deal-making, and late-night Congressional sessions! Far from the best way to form policy, comprehensive, last-minute grand bargains appear to be the only way American “leaders” do it nowadays.

Goldman-Sachs economists estimate that letting the current payroll tax cut expire at the end of this month would reduce economic growth by as much as two-thirds of a percentage point in early 2012. The most recent data from the Bureau of Economic Analysis shows that in the third quarter of 2011 the economy grew at a rate of 2.0 percent. Letting unemployment insurance expire would remove money from the economy causing a further hit to America’s economic output and additional hardship for millions of American families.

After much wrangling in the Senate, Speaker Boehner on Friday unveiled H.R. 3630, comprehensive legislation that would extend the payroll tax cut at its current rate, extend (some) unemployment insurance, and extend the “doc-fix” for two years. This is all good and fine. The problem is how Speaker Boehner proposes to pay for the measures, which will cost roughly $166.8 billion in fiscal year 2012 according to the Congressional Budget Office. H.R. 3630 would accumulate $38.4 billion from Medicare spending cuts; $36.7 billion from increased federal employee retirement contributions; $35.7 billion from increased Fannie Mae and Freddie Mac mortgage insurance rates; $33.4 billion from other health care offsets, such as cuts in the Affordable Care Act’s prevention fund; $16.5 billion from FCC spectrum auction; and an additional $36.6 billion from many small and miscellaneous cuts, many of which are problematic.

There a whole host of major problems with Speaker Boehner’s proposal. In addition to how the bill would weaken unemployment insurance, the bill contains all sorts of harmful policy-riders. The most brazen provision is one that requires the President to approve within 60 days the permit for the Keystone XL pipeline. If the President does not approve the permit, H.R. 3630 would automatically trigger its approval on day 60. As a result of widespread protests against the Keystone XL pipeline, President Obama in early November delayed a decision on its permit until 2013. The President has said he veto any bill that contained a Keystone XL pipeline policy-rider such as this one. What’s more, the bill would delay new pollution standards for industrial boilers, extending a deadline for five years for companies to comply. The Environmental Protection Agency has completed the rule-making process on these standards and says the rules would cut pollution of mercury and soot. In October, House Republicans passed a bill that would have repealed these same EPA boiler standards, and once again, President Obama threatened to veto it if it reached his desk.

While the two policy-riders I just mentioned are perhaps the most flagrant, there are other deplorable provisions in the bill. One would restrict the Federal Communications Commission’s ability to impose net-neutrality conditions on wireless companies that purchase spectrum leases at auction. The bill also seeks to eliminate certain tax credits that illegal immigrants may be currently taking advantage of. While this bill is supposed to be about 3 important expiring tax provisions, House Republicans are attempting to use this opportunity to make significant policy changes to totally unrelated programs. One provision even makes substantial reforms to the National Flood Insurance Program.

Speaker Boehner is lining up the Republican Conference behind the measure, and it will almost surely pass the House before Thursday. However, there are so many provisions that cross red-lines for Democrats from all persuasions that it is almost guaranteed to fail in the Senate (assuming Majority Leader Reid even brings it up for a vote). President Obama has reiterated his veto, and called the legislation what it is: classic political maneuvering. Speaker Boehner used this exact same tactic during the April budget negotiations and the summer’s debt ceiling talks. In all three cases he has crafted legislation that his party can support, and that no Democrat will, and quickly passes it through his body of Congress, daring the President and Senate Democrats to reject it while they struggle to find a bi-partisan solution.

Speaker Boehner will pass this bill, which he has called “the Middle Class Tax Relief & Job Creation Act” in an attempt to gain bargaining power over Democrats. He knows this wont be the final solution to the expiring tax provisions, but by passing it through the House he gains leverage and helps guide the negotiations towards his preferred policy-outcomes. Will he get what he wants? For America’s sake, I sure hope not.