Lame duck outlook: the musts, maybes and the liberal wish list

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The voters have spoken, angrily, and Democrats will no longer control the House. Neither will they hold a large majority in the Senate.

And yet, all the lawmakers with pink slips this morning will have one more shot to govern, in a “lame duck” session of Congress that will begin on Nov. 15 — before the newly-elected take office.

Some of the items on the lame duck agenda are political musts. For instance, if Congress doesn’t address the Bush tax cuts, they will expire, a result almost nobody wants.

Others are maybes – these are bills with a shot of enactment but are facing significant hurdles.

Then there is the liberal wish list: big, disputed items Harry Reid, Nancy Pelosi and President Obama couldn’t quite get. Included are cap-and-trade, union-backed “card check” legislation and immigration reform that includes amnesty. Most probable in this list, some Democrats say, is another item: the Disclose Act, campaign finance legislation that would limit outside spending on elections.

These items are both most feared by conservative opponents, and most desired by the liberals, who worry the lame duck is their last chance at passing these bills for some time to come.

Insiders say it’s difficult to gauge the dynamics of the coming lame duck. Democrats could be wary of flaunting the public’s repudiation at the polls. Or, fired incumbents free from the tether of their constituents’ wishes may use their freedom to push for legislative action.

Here’s an overview of the outlook:

The Musts

Bush Tax Cuts: In 2001 and 2003, then-President Bush enacted a series of tax cuts on individual income, the so-called “marriage penalty,” long-term capital gains and certain qualified dividends.

Many portions of these tax cuts are scheduled to expire on Dec. 31 unless Congress acts to extend them.

Republicans have pushed to extend the full tax cuts, but President Obama and Democratic leaders in Congress have pushed to extend only most of the cuts, raising taxes on the wealthiest Americans.

The latest expectation from insiders is that the lame duck Congress will extend the full tax cuts for one year, punting the issue along for Republicans to deal with later.

Estate Tax a.k.a. the “Death Tax”: Like the Bush tax cuts, Republican cuts to the estate tax, which apply to the wealth of the deceased upon their death, are scheduled to expire on Jan. 1.

The tax hits hardest on small, family-owned businesses which frequently exceed $1 million in value. Were the tax cuts to expire, such businesses would face a 55 percent hit when the owner dies – often times leading to the businesses’ dissolution.

Under discussion are exemptions for estates worth up to $5 million, as well as lower rates.

Taxes, Taxes and More Taxes: Congress will also likely address the so-called “Alternative Minimum Tax,” which has been “patched” year-in, year-out so that it won’t hit middle class taxpayers with roughly $70 billion in new taxes. Congress will need to patch it or it will apply for next year’s tax season.

There’s also “tax extenders” legislation that includes a slew of targeted tax breaks and credits for things like research and development. But, it being Congress, there’s always a fight about what gets in and what doesn’t.

“Doc Fix”: By law, Medicare is supposed to keep the rates it reimburses doctors in check. Unfortunately, medical inflation has far outstripped the reimbursement rate increases, and, if Congress hadn’t “patched” the rates to match reality eight times in the last ten years, many doctors wouldn’t take Medicare patients. It has to be patched once again or doctors’ payments will be cut 23% on Dec. 1.

Continuing Resolution: Congress is supposed to fund the government through a series of appropriations bills that address different types of funding – defense, energy, etc. The process is a mess, and the lame duck session is likely to involve passing a “continuing resolution” which funds the government at current levels for a short time, punting the issue along to the next Congress, when Republicans are in control of the House.

Food Safety: Senate Majority Leader Harry Reid has filed cloture already on legislation that would bolster the Food and Drug Administration’s authority in dealing with, well, food safety. The legislation has bipartisan support in the Senate, including from some of its most conservative and liberal members.

The Maybes

Defense Reauthorization: This legislation, which authorizes funding for the armed forces, became stalled in the Senate over several issues that include “Don’t Ask, Don’t Tell,” a pay raise for soldiers, and an alternative engine for the F-35 jet fighter.

New START Treaty: The Senate Foreign Relations Committee reported the “New START treaty” out in late September, making it a potential for the lame duck. The treaty, with Russia, governs nuclear arms. Conservatives have eyed it warily.

Obamacare “1099” Fix: Buried deep in the president’s health care legislation is a requirement that businesses report all business-to-business expenses over $600. This provision, which has nothing at all to do with health care, was included to boost tax revenues to help pay for the bill, since it is believed it will help IRS agents track down tax cheats. However, the monumental paperwork burden on small businesses has made it the first priority of many planned fixes to Obamacare. The fix has bipartisan support, and it’s a maybe.

Unemployment Benefits: Congress has extended unemployment benefits during the economic recession, but some of those benefits will expire this month. Democrats may opt to extend those benefits in the lame duck, though debate has focused on how to pay the $5 billion per month tab.

Chesapeake Bay Reauthorization: This legislation would grant EPA broad new authorities to tackle pollution in the Chesapeake Bay. The legislation is contentious because it could allow the EPA to limit economic growth, as new development often exacerbates water pollution because of rainwater runoff from parking lots and other impervious surfaces. The legislation could also form a precedent for EPA to use the new authorities in the Mississippi River and other large watersheds. Industry sources opposed to the legislation fear it may be tacked on to a larger bill.

The Liberal Wish List

Disclose Act: The lame duck is the last hope for the Democrats’ campaign finance bill that would limit outside spending on campaigns in the wake of the Supreme Court’s Citizens United decision. A spokesman for Reid said its passage in the lame duck is unlikely, but there are several reasons to believe it could be the most probable item on the liberal wish list. Perhaps foremost among those is that President Obama, in calling the outside spending a “threat to democracy,” may have boxed in Democrats from benefitting from the same type of spending in the 2012 election. If they can’t limit it with the Disclose Act, Democrats will need to swallow their rhetoric or watch as it hurts them in the next election cycle.

Immigration: Reid vowed to bring the “Dream Act” up for a vote in the lame duck in his campaign against Sharron Angle; the legislation would provide a path to citizenship for those who came to America illegally before they were 18. There is also fear by conservatives Democrats might attempt a last ditch push for a broader immigration bill.

Cap-and-Trade: Environmentalists, one of the Democrats’ top constituencies, are frustrated. They saw health care overtake their dream of combating climate change as the Democrats top priority, and the second-thought push for cap-and-trade failed badly. For that reason, it’s hard to imagine they won’t at least push for a cap-and-trade bill, even though the recession, and the alternative path of EPA global warming regulation under the Clean Air Act make it quite unlikely.

“Card Check”: Union-backed legislation nicknamed “card check” is quite unlikely, as the legislation was unable to gain hardly any traction throughout the 111th Congress. On the other hand, unions did spend over $100 million to help Democrats in the midterm elections.

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