House Speaker John Boehner caved yesterday and agreed to drop House demands for a one-year extension of the payroll tax cut. Instead, he agreed to the two-month extension backed by Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell. That spares millions of Americans from a tax increase that otherwise would have arrived Jan. 1.
But it also guarantees this whole sorry spectacle will be renewed in March 2012. Will Congress reach a permanent resolution of the issue then? Not likely. And even if it does, the tax code will still be jammed with hundreds of temporary tax provisions. The Joint Committee on Taxation says 84 tax provisions were scheduled to end this year if they aren't renewed. That's 10 times as many temporary provisions as expired in 1999.
While both parties are share responsibility for the debacle over the payroll tax cut, the Democrat-controlled Senate bears special attention. Under the Budget and Impoundment Control Act of 1974, Congress must produce a five-year budget plan every year. But in 2010, both the House and Senate failed to do so for the first time since 1974. After Republicans retook the House in November 2010, they got the lower chamber back on track by approving a 2012 budget plan this past April. No such luck in the Senate. It has now been 969 days, almost three years, since Senate Democrats have produced an annual budget plan, as they are required to do by law.
Senate defenders counter that it is often more difficult to get things done in the upper chamber. And it is true that the ever-present threat of a filibuster means 60 votes are required to pass most legislation. But annual budgets cannot be filibustered. Senate Democrats can pass any budget plan they want at any time by a simple majority. They have chosen not to do so. This failure damages the economic health and well-being of every American. Businesses don't invest or hire new workers when they don't know what their tax liability will be two months from now, let alone next year or five years down the road.
Another consequence of this budget abdication is the increasing frequency of temporary stopgap spending deals, hastily stitched-together continuing resolutions, and gargantuan omnibus appropriation bills that risk government shutdowns if they aren't approved. These measures also enable Congress to avoid making tough decisions on issues like entitlement reform by kicking the can down the road. And because they often include "must-pass" funding for multiple departments and agencies, they become Christmas trees decorated with hundreds of special interest provisions, including earmarks that encourage political corruption.
Worst of all, such all-or-nothing spending measures lead to irresponsible decisions like the two-month extension of the payroll tax cut. Now lawmakers have left town to "get home for Christmas," which is another way of saying they're taking a month's vacation from the rigors of ducking hard decisions. Whatever happened to not leaving until the work voters sent you here to do is done? This is banana republic budgeting and it needs to stop.