Yesterday, the House Rules Committee met to examine Senate amendments to H.R. 4213, the “American Jobs and Closing Tax Loopholes Act of 2010”, and prepare the legislation for action on the House floor later this week. Ways and Means Committee Chairman Sander Levin (D-MI12) and Ranking Member Dave Camp (R-MI4) were there to present their side’s cases. Since Chairwoman Slaughter is a longtime supporter of the netroots, I was able to nab one of the limited spots available for press, and here are my observations from the hearing.
First, some info on the bill in question. It certainly has a nice title, and does some important things you might have heard about, like extend unemployment insurance, avoid drastic payment cuts to doctors and close the controversial “carried interest” tax loophole enjoyed by hedge fund managers. It’s also a must-pass bill, as many popular tax credits are set to expire in the coming weeks if Congress fails to act. Hence, its more informal name is the “tax extenders” bill.
Democrats have seized the opportunity of a must-pass tax bill to include extension of some expiring Recovery Act provisions, punishment for BP and the closing of some unpopular loopholes to help offset the impact on the deficit. Partially because of such additions and partially because the House minority has chosen to reflexively oppose anything Democrats do, the debate over the overall legislation has taken on a familiarly partisan dynamic.
Here’s a quick rundown of the major provisions H.R. 4213 contains:
1) Extension of many existing tax credits, deductions etc.
2) Expansion of youth summer jobs program started under ARRA
3) Help for struggling private sector pension plans
4) A fix of the Medicare physician reimbursement rate, scheduled to drop by 21% in June
5) $24 billion of state fiscal relief
6) Bonding provisions for infrastructure investment
7) Extension of unemployment benefits, COBRA, and the TANF emergency fund
8) An increase or elimination of the liability cap on the Oil Spill Trust Fund
9) Closing of a number of foreign corporate tax loopholes
10) Ending of the carried interest loophole and payroll tax avoidance by certain service professionals
Clearly, there’s some important stuff here. Especially given that delay could cause some important provisions to expire and others such as the summer jobs program to lose some of their effectiveness, quick action is necessary.
Yet the committee’s Republicans seem to disagree. If you’ve been following any of the major policy debates in the 111th Congress, you can probably guess their line of argument. It went as follows:
1) We like the basic tax extenders idea, these programs are necessary.
2) But you (Democrats) had to go and lard up this bill with all kinds of job-killing garbage.
3) We shouldn’t be engaging in so much deficit spending since our debt is getting out of hand.
4) But we also shouldn’t pay for the extended tax cuts and emergency spending because raising taxes kills jobs.
5) Because some, but not all of the extended tax cuts and emergency spending are offset with revenue raisers, we can claim it both increases the deficit and destroys jobs. And we will do so repeatedly.
6) This is not a time to be punishing the well-intentioned corporate citizens that employ most Americans.
7) The way to create jobs is to enact permanent tax cuts tilted toward the rich and corporations.
(Note: The Center on Budget and Policy Priorities has a recent memo debunking some of these points.)
With that sort of reasoning at play, you can also probably imagine the tenor of debate being harsh in nature. You would be right – and to a degree not usually seen when the cameras were on. The thinly veiled animosity from both sides was palpable.
Here are a few choice snippets of dialogue, copied nearly verbatim from my notes:
Chairman Levin:Knowledge has officially been dropped. The Center for American Progress has more on the bill. Naturally, Republicans are having none of it.
Yes, we passed statutory PayGo. Passed by majority and some in Senate minority. Needed to restore fiscal sanity after years of Republicans not paying for tax cuts. Conditions were the following: emergency provisions, unemployment compensation were exempted. In June, over 1M ppl will not receive their benefits w/o extension. FMAP expansion extended 6 months. Must continue to provide help, otherwise impact on states would be deleterious if not disastrous. Physician reimbursements MUST be extended by June 1, or 21% cut in Medicare reimbursements goes into effect. Unsustainable for both physicians and patients. Statutory PayGo provided for all this, and we have chosen to continue it without a cut for 3 years and a few months, with some updating. We (congressional Democrats) didn’t get us into this budget mess, but we have to get out of it. Do Republicans really stand against all this?
We paid for everything not exempted by statutory PayGo. Measures are: Medicare tax evasion loophole closed. Only addressing obvious abuses, not more gray areas. Companies use foreign credit and bring that home before they use their interest. Also closing carried interest loophole, which we already passed three times. We are proceeding cautiously. Going part-way.....will first be 50/50 income tax vs. cap gains, then phasing up to 25/75. Also the oil spill tax. We pay for about $55 billion overall out of the $140 billion total.
NRCC Chairman Pete Sessions (R-TX32), acting as lead representative of GOP position on this bill:This is where it starts to get nasty, and stays that way throughout.
I’m disturbed by conversation here today. Asks a bunch of leading questions to Levin about unemployment rate among certain demographics. VERY CONCERNED ABOUT FAMILIES. Specialized groups of people are having difficult times. Dems are assaulting corporations and loopholes and that is very concerning. Corporations still called employers in most places. Whether it’s overseas or here, we are diminishing those who are employers. Every one of those numbers represent real families back home. How can you talk about Medicare cuts as a bad thing when you were calling it a good thing a year ago? When is enough enough? Stop the hypocrisy! (note: that’s misleading at best, and a bold-faced lie at worst. The Medicare cuts are completely different here)
Why are you sticking it to free enterprise? Every bit of this is about the diminishment of the free enterprise system. I’d like to see...(more campaign speech).....Companies will be at risk for leaving. Loopholes provide a strong incentive for Exxon Mobil, who paid $17B more in taxes in US than their net revenue in the US.
(Slaughter interjects, but Sessions won’t yield)
Session “welcomes” Levin to the Rules Committee, basically calls him a noob who must learn the ropes....IBM opposes tax extenders legislation. Tax increases are BAD!!!!! Claims Levin is like firefighter who’s really arsonist starting fires then taking credit for trying to put them out.
Levin: gets mad. Basically says how dare you.
Sessions to Levin: you never answered my question. How many jobs is this creating?Sessions has some gall here defending Big Oil given what's happening across the Gulf and not far from his district. Naked corporatism laid bare. Remember, this is the official campaign spokesman for House Republicans.
Levin: that’s a total red herring. You know as well as I do there’s no concrete answer and I also know you’re gonna use any answer as a gotcha. Can’t give you an exact jobs, but I can tell you these measures including ARRA and auto bailouts are creating jobs. I’d expect hundreds and hundreds of thousands of jobs to come out of this.
Sessions: if U.S. had tax rate that’s competitive with the world, we wouldn’t hemorrhage jobs.
Slaughter gets a chance to interject and goes at him. Exxon never paid the gov’t to clean up their spill. Sessions plays dumb.
Hastings: I was hoping not to get involved. But my interest is always piqued when our friend from Texas [Sessions] speaks. The idea that we have the highest taxes in the world is just silly. This anti-government claptrap is just nonsense. I bet a lot of those Tea Party people once worked for the gov’t...
Hastings talks about who is actually responsible for deficits and debts. Not Republicans, but long-term trends of corporations abdicating responsibilities. Every one of the dollars spent on summer jobs goes right back into economy.
BP = Big Polluters
We’re in the middle of a disaster of apocalyptic proportions, and you’re here talking about how great corporations are. (rolls eyes)
But you thought he was bad, wait ‘til perennial fire-breather Virginia Foxx (R-NC5) gets her chance.
Foxx: job creation name for this bill is basically Orwellian. No, it’s a job killer. Dems cause ballooning deficits.Way to stay classy, Virginia. It gets still worse.
Levin: Clinton left us $5.3T surplus.
Foxx: who controlled Congress when Clinton left office?
Levin: um, (pause) the current minority.
Foxx (angrily): you can’t say the word Republican??!
Levin: I’ll say Republican if you say Democratic
Foxx (in a tone as if sneaking in the last word): I believe the proper term is Democrat
Levin: what is Republican alternative? How will you prevent 21% doctor cuts?A few minutes later, after more back-and-forth btwn Levin and Foxx:
Foxx (evading): how long would you like to keep doling out unemployment benefits?
Levin: as long as it takes until people get back to work
Foxx: So forever? Sounds like permanent welfare to me. (back and forth over the phrase “dole out”)
Low-level shouting match btwn Foxx and Levin. Starting to get nasty.
Foxx accuses Levin of never working in the private sector. Levin says he was a private practice lawyer. Foxx sneers. Hastings interjects in a fury, yells that he was a lawyer too and that was DEFINITELY private sector.
McGovern asks for time, Foxx rejects. Levin: House GOP has a choice to make. Be part of the solution, or castigate, criticize, etc. (personal note: they’ve clearly made that choice)....
McGovern: tone in this committee getting to be over the top. We don’t need to be combative. This is not a commercial for the NRCC any more than it should be for the DCCC.That’s about it for the juiciest partisan feuding. There was one other moment, however, that I found instructive. When Rep. Jared Polis (D-CO2), the committee’s lone freshman and a fellow well known to us in the Netroots finally got a chance to speak, he received a harsh lesson in the ways of congressional culture.
Hastings hits back at Foxx’s attack on Levin’s background. She herself worked in the public sector and went to two public universities.
Polis: attacking closing of carried interest loophole. Takes issue with calling it “loophole”. Many venture capitalists who help nurture companies and provide them advice. Feels this goes too far and from one extreme to the other.Translation: "we don’t care what you think. Wait your turn, rookie." Regardless of the fact that I strongly disagree with Polis' position, that sort of smackdown can be awkward to watch. So it goes in the hallowed halls of our eminent lawmaking institution.
Slaughter cuts Polis off, says this is not the time for speeches about the merit of the bill. The function of the Rules Committee is to get the existing amendments to the floor.