House adjourns without a vote on tax cuts

Yesterday afternoon, the House of Representatives adopted an adjournment resolution, by a vote of 210 to 209 (Speaker Nancy Pelosi cast the tie-breaking vote), that will send them home without taking a vote on extending tax cuts set to expire at the end of the year.

Republicans claimed to have the votes to extend the tax cuts and the numbers would suggest that is likely. Eight Republicans missed the vote, that’s 217 assuming the caucus is together on this issue and the 39 Democrats that voted against their leadership stick around.

There are a couple of Democrats that voted for the resolution that are on record supporting extension of the tax cuts. However, that is now, whether or not they will hold true to their word in a lame duck session, when the pressure is off, is a completely different story.

To add a new wrinkle for Democrats, the Congressional Budget Office warns that increases in taxes will not help our struggling economy:

The Economic Outlook released by the Congressional Budget Office (CBO) on Tuesday states that coming tax hikes will hinder spending and hurt recovery efforts.

“[The] scheduled increases in taxes and the waning of fiscal policy measures that supported the economy earlier in this recovery will hold down spending, especially in 2011,” it states. “The weak demand for goods and services resulting from those various factors is the primary constraint on economic recovery.”
[…]
The CBO noted that continuing the Bush tax cuts, along with extending tax cuts that expired last year, would help the recovery.

“All else being equal, lower tax payments increase demand for goods and services and thereby boost economic activity,” it stated.

However, it adds that “All else being equal, lower tax revenue increase budget deficits and thereby government borrowing.”

Lower tax revenue does increase deficits, but only if Congress is spending at the rate it has over the last decade, which seems to have been accelerated under Barack Obama.

So, we’re headed to lame duck session. If you are a tea partyer, fiscal conservative or libertarian, prepare for war from now through the mid-term election to Thanksgiving.


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