Pre-Election Debate Rages Before Congress Leaves Town

(Article was provided by Eben Wyman, NUCA Vice President of Government Relations.)

Between the time they returned from a six-week summer recess and when they adjourned for four weeks of last minute campaigning before the November elections, Congress spent their time in a whirlwind debate over legislation aimed at helping American small businesses by extending some or all of the tax cuts enacted under the Bush Administration, which expire at the end of the year. As always, Democrats and Republicans displayed very different (and very strong) positions regarding all of this. In the end, a watered down small business bill was passed and the lawmakers opted to punt on the tax fight until after the November 2nd elections. In the end, the only thing everybody agreed on is that much remains to be done if Congress is serious about getting small business to start hiring and begin purchasing equipment.

Latest White House Economic Plan
At a Labor Day rally in Milwaukee, the President introduced a new $50 billion economic growth proposal for transportation infrastructure. Labeled “Renewing and Expanding America’s Roads, Railways and Runways,” the proposal called for federal investment in America’s highways, railroads, transit and airports. Although the dollar amounts for each mode were unclear at best, administration officials proposed that the cost of the measure would be fully offset with some combination of tax increases and spending cuts.

The $50 billion would be used to build or repair 150,000 miles of road, 4,000 miles of rail track and 150 miles of runways. The proposal called for the establishment of an infrastructure bank to evaluate and prioritize projects and attract private investment into the program. Not surprisingly, Republicans in Congress pounced immediately, deriding Obama’s proposal as “Stimulus II,” in reference to the $787 billion stimulus bill the president enacted soon after taking office in 2009.

Republicans pointed out that the American Recovery and Reinvestment Act (a.k.a. “Stimulus I”) failed to hold unemployment to under 8 percent as the White House promised, while significantly increasing the federal deficit. Similar sentiments could be heard around Washington, D.C.
 
One senior Republican Senate aide said, “Stimulus II is just more government spending and more government borrowing designed to save a handful of jobs — those of Democrats in Washington. If the administration and Democrats are serious about helping Americans, they would stop their upcoming tax hikes so small businesses know they can start hiring.”

Therein lies the Republican plan and the party’s current jobs message — extend the 2001 and 2003 tax cuts enacted during the George W. Bush Administration. Small businesses, according to the GOP, need certainty before they will begin to hire workers and purchase equipment. And significant increases in upper tax rates, higher capital gains taxes and the return of the unbearable 55 percent federal death tax rate provides anything but certainty. This will be the result of inaction by the Democratic leadership in Congress this year, and Republicans are screaming about it.

The truth is that even some senior Democratic leaders immediately wrote off the president’s latest plan, saying that GOP opposition will likely doom any major bills on tap before the November elections. House Majority Leader Steny Hoyer (D-Md.) said it “will be very difficult to get a very broad [economic] agenda through … Republicans’ obstructionism has, in effect, not allowed us to do some of the job-creating actions that we want.”

That same week, the president added tax incentives to his plan. The provisions would increase and make permanent a tax credit for businesses’ research expenses and allow businesses to write off the full costs of equipment purchased through 2011.

After days of debate, President Obama signed a $30 billion small-business jobs lending bill into law in late September. The law will set up a lending fund for small businesses and includes an additional $12 billion in tax breaks for small companies.

Taking a final shot at Republicans for holding up the measure, the president said, “I regret that this was blocked for months by the Republican minority in the Senate. And that needlessly delayed this relief.” He also made a point to thank the two Republican Senators “who bucked this partisanship” to help pass the bill, which cleared 61-38. GOP Sens. George Voinovich (Ohio) and George LeMieux (Fla.) joined all Senate Democrats in voting for the measure, while Sen. David Vitter (R-La.) did not vote.

Congress also managed to pass a continuing resolution to keep the federal government up and running until after the elections, when work on annual appropriations for federal agencies will continue.

Tax Extenders to be Considered in Lame Duck Session
The president and like-minded Democrats want to permanently extend the tax breaks for those with annual incomes less than $250,000. Republicans are looking to extend the tax cuts on all incomes for as long as possible.

House Majority Leader John (R-Ohio) underscored the fact that time is of the essence. “If we leave this week and adjourn for the election without preventing these tax increases on the American People, it will be the most irresponsible thing that I have seen since I have been in Washington,” Boehner said on September 26th.

Nevertheless, at press time, Congress was on the verge of ditching Capitol Hill and heading on the 11th hour campaign trail. At this point, the most likely scenario is for a limited extension of at least some of the tax breaks to allow for more economic recovery before considering a broad tax bill in the 112th Congress. Of course, this would happen in a (post-election) lame duck session, allowing lawmakers to make tough decisions without overwhelming pressure of  their elections, albeit temporarily