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

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.