Sunshine and Lollipops? Or More of the Same?


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If you're on as many progressive email lists as I am, you've heard plenty of "sunshine and lollipops" prognostications in the past two weeks about how the new Congress will change our direction on a host of issues. And there's no question that on issues ranging from the environment to campaign finance to Social Security, it's a brand new day. But for those advocating sanity in federal fiscal policy, it's hard to be too ecstatic over November's election results. While it's great that the tax writing committees in Congress will no longer be headed by folks who blindly support the President's anti-tax agenda (or who have their own, even worse version of such an agenda), this is hardly a revolution in tax policy. Or rather, the revolution is on ice for two more years.

The new leaders in both the House and Senate have indicated that they're not going to seek immediate repeal of the Bush tax cuts (incoming House Ways and Means Chair Charlie Rangel clearly sees this as a politically unrealistic goal between now and 2008) and that they're even willing to keep pushing for more ill-advised "reforms" (incoming Senate Finance Chair Max Baucus has made it clear in the past that he'd love to repeal the Alternative Minimum Tax (AMT) and pare back the estate tax). And it's not yet clear what role the newly ascendant, centrist "Blue Dogs" will play in formulating tax policy-- or what stance they will take on repealing the Bush tax cuts.

To be fair, the incoming Dems have the deck stacked against them. The GOP leadership has been making all the politically easy decisions (cutting taxes) and none of the hard ones (making the books balance by cutting spending or hiking other taxes) for six years. They've allowed the AMT to become a looming threat for upper-middle-income families that will cost close to a trillion dollars to fix. And, anticipating the possibility that they'd lose the 2006 elections as badly as they did, they've cemented in place the very worst of the Bush tax cuts (capital gains/dividends rate cuts) through 2010. Nothing the Democratic leadership can do to fix our finances over the next two years is going to be remotely popular, and any of the most responsible actions they can take will leave them (however unfairly) open to the "tax and spend" charges that Republicans have learned to tar them with in the past.

And, of course, there are still plenty of reasons to rejoice. For the first time in a dozen years, advocates of fiscal sanity will be able to make their case to Congressional leaders and have at least some confidence that these folks are actually listening to them. Rangel in particular has made it clear that while he's not going to make a career out of tilting at windmills (or, as he put it, picking "green bananas"), he's also willing to listen to just about any sensible idea for tax reform. In the committee chambers and on the floor of Congress, there is room for debate again.

And that, at least, is something to celebrate.

Thank you for visiting Tax Justice Blog. CTJ and ITEP staff will soon retire this domain. But ITEP staff are still blogging! You can find the same level of insight and analysis and select Tax Justice Blog archives at our new blog, http://www.justtaxesblog.org/

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