Not really, but that’s the impression left by Republicans and Democrats in Washington arguing over what to do with tax-rate reductions passed in 2001 and set to expire this month.
Given Washington politicians’ notoriously poor memories, it’s instructive to look back at the creation of this looming deadline, to examine the tax legislation in its context.
We start during the 2000 presidential election. Both campaigns had ambitions for a projected budget surplus secured by the Clinton administration.
Al Gore’s famous “lock box” was going to protect much of that money for the Social Security’s needs. George W. Bush was going to use the bulk of the surplus on tax cuts.
When Bush reached the Oval Office, his administration oversaw the passage of the Economic Growth and Tax Relief Reconciliation Act of 2001, which was supported by both Alabama senators, Richard Shelby, R-Tuscaloosa, and Jeff Sessions, R-Mobile. In fact, 31 out of the 58 U.S. senators who supported the Bush tax cuts are still in office.
The tax package passed with an accounting trick portraying a ticking time bomb. The rate reductions and other tax breaks would expire on Jan. 1, 2011. The reasons were to satisfy Bush campaign pledges that his plans wouldn’t bust the budget.
That was how it was supposed to work on paper, at least. We now know that Bush’s poor oversight of the economy landed the nation into a crisis in September 2008. His plan to privatize Social Security crashed and burned. And any boost the nation might have felt from the cuts is long gone.
Back in 2001, economist and New York Times columnist Paul Krugman put it this way, “[I]n order to hide the true budget impact, its authors delayed many of the biggest tax cuts until late into the 10-year planning period; repeal of the estate tax, in particular, was put off to 2010.
“But even that left the books insufficiently cooked, so last week the conferees added a ‘sunset’ clause, officially causing the whole bill to expire, and tax rates to bounce back to 2000 levels, at the beginning of 2011.”
He even dubbed 2010’s estate-tax removal as the “Throw Momma From the Train Act of 2001.”
So, what those 58 Republicans and Democrats did was pass a large tax increase in 2001 and, because of the act’s expiration date, passed an enormous tax increase at the same time.
Lately, several former Bush staffers have bragged of how the tax-cut deadline has harmed their Democratic foes. One former communications director, Dan Bartlett, recently said, “The fact that we were able to lay the trap does feel pretty good, to tell you the truth.”
That cheap and petty sentiment is a long way off from the words of Bush during one of his 2000 debates with Gore. “It’s time to have a leader that doesn’t put off — you know, tomorrow what we should do today,” Bush told the nation.
In 2001, Sen. Kent Conrad, D-N.D., was absolutely prophetic when he remarked that President Bush is “going to be out of office when the roof falls in.”
And now another president is wrestling with what to do, and the nation is counting on Barack Obama and Congress to not put off serious solutions.