The House released their version of a year-end bill to extend unemployment benefits, a payroll tax cut and a “doc fix” to avoid a 27% cut in Medicare reimbursement. A look at the various elements of the bill make clear that Republicans have little interest in passing anything through Congress.
The bill, written by House Ways and Means Committee chair Dave Camp, opens with the “North American Energy Security Act,” giving the President 60 days to authorize the Keystone XL pipeline for construction. The only way the President can stop the authorization is if he finds that it “would not serve the national interest,” and sends a written letter to Congress spelling out the reasons. Failure to send the letter would result in an automatic authorization. It allows for a shift in the route of the pipeline, as preferred by the state of Nebraska, to go around the Ogalalla aquifer and the Sand Hills region. Far from shifting the permitting to another authority, this forces the President to go on the record on Keystone XL within 60 days of enactment, which he doesn’t want to do. The legislative meddling in an executive branch decision is pretty unadvisable.
Next, there’s the revocation of an EPA regulation recently passed on industrial boilers, known as the “EPA Regulatory Relief Act of 2011.” These are the first two subsections of the bill. They have no budgetary component for the federal government. They have no bearing on the offsets to pay for the measures that follow. They are merely unrelated riders designed to pick up conservative votes, through rewarding polluting industries.
The third piece of the bill is a tax break for corporations. It extends the 100% bonus depreciation for corporations purchasing equipment, which was part of the December 2010 tax deal. The Obama Administration has supported this kind of tax break in the past, which lets companies write off the full value of their capital purchases in the year in which they purchase them. Businesses have been allowed bonus depreciation, at least at 50% value, since the stimulus package in 2009. It’s fair to ask whether every company thinking about a capital purchase has already taken advantage of this tax break over the past three years.
That’s the entire Title I of the bill: forcing the President’s hand on Keystone XL, rolling back the EPA boiler rule, and extending a tax break to businesses on bonus depreciation. Do you understand why I don’t see much desire for compromise here?
The rest of the bill is generally as advertised. It extends but does not expand the payroll tax break for 2012. It extends unemployment benefits but gradually reduces eligibility from 99 to 59 weeks. It also adds a host of requirements for eligible individuals to access federal benefits, including continual search for work, sign-up for re-employment services, and passage of a drug test. And there’s the implementation of demonstration projects akin to GeorgiaWorks, a program where long-term unemployed essentially get an internship with a company and a small extra stipend on their benefits. The company pays nothing for their services, and is under no obligation to hire them after the trial period.
The doc fix stands for two years, at a cost of $38.6 billion. That is offset by cutting the exchange subsidies for qualified beneficiaries, eliminating much of the prevention and public health fund from the Affordable Care Act, and some other offsets. This is actually as bad as anything in the bill; it pays for more money for doctors by taking it away from needy sick people. The implementation cuts come to $34.9 billion.
It extends TANF (welfare) funding but attempts to stop TANF beneficiaries from spending any of their money in liquor stores, casino or strip club (remember, liberals are the nanny-state types). It extends flood insurance for five years, slapping a large, highly technical flood insurance program reauthorization bill into the legislation. There’s also the “Jumpstarting Opportunity with Broadband Spectrum Act of 2011″ (JOBS Act) in the bill, which sells wireless spectrum. This was once part of the proposed debt limit deal and does bring in some revenue, as well as creating a public safety and emergency band of spectrum and a “next-gen” 911 system.
Then there are the offsets. The House bill apes the Senate Democrats’ offset of increasing Fannie and Freddie fees to guarantee loans, which raises around $39 billion. It forces proof of citizenship through a Social Security number to claim the child tax credit, which is in the “offsets” title so we all understand that it aims to save money by denying applicants funds for which they may qualify. It includes the familiar cutoff of unemployment benefits and food stamps for millionaires, while also means-testing Medicare more than it does now. It increases retirement contributions in addition to forcing an extended pay freeze on public employees, so in effect it cuts their salaries. And this limits discretionary spending caps agreed to under the debt limit deal even more, as the legislation mandates. And there’s my favorite part, on page 365, which attempts to legislate the rules of the Senate, by declaring that certain efforts are “out of order.” A sample:
(a) POINT OF ORDER TO PROTECT THE SOCIAL SECURITY TRUST FUND.—
(1) Notwithstanding any other provision of law, it shall not be in order in the Senate to consider any measure that extends the dates referenced in section 601(c) of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (26 U.S.C. 1401 note).
(2) The provisions of this subsection may be waived in the Senate only by the affirmative vote of two-thirds of the Members, duly chosen and sworn.
The hilarious coda to all of this is that, despite all these partisan efforts and slashing of spending, increases the deficit, which I believe means the entire bill is out of order under House rules:
The legislation will add $25.3 billion to the federal deficit over the next 10 years, according to the Congressional Budget Office. The congressional scorekeeper also noted that the bill includes lower caps on discretionary-spending ceilings agreed to in the summer’s debt-ceiling deal that could reduce the deficit by $1 billion. But CBO cannot include those assumptions in its official score, it said, because they are subject to the enactment of future legislation.
The CBO estimate could be a problem for GOP leaders, who already face resistance from party members who do not wish to extend the payroll-tax cut, a top priority for President Obama.
I suppose the House can get around this with its new rule about how you don’t have to pay for tax cuts. But the fact is that the bill increases the deficit, from the people desperately concerned about the deficit for the past several years.
The bottom line: this is not serious legislation, but a cornucopia of the kind of party-line bills the House has been passing all year. When it fails in the Senate, the House GOP will snipe at their counterparts and claim that they caused a tax increase. The finger-pointing will ensue, with both sides confident of their positions. And the US will experience a fiscal drag on a number of counts if the provisions expire.