House rules change clears way for tax hikes

House rules change clears way for tax hikes
'American taxpayers need to hold on to their wallets'

One of the first key procedural votes in the Democrat-controlled House last week established legislative rules that Republicans say will make it easier to raise taxes by a simple majority vote.
The straight party-line vote received little attention Thursday as Rep. Nancy Pelosi, California Democrat, was elected speaker of the House. But Republican leaders and conservative tax-cut advocates said it opened up a huge loophole in a Republican-imposed rule drawn from the Republicans' 1994 Contract with America, which requires a supermajority, or three-fifths vote, to raise taxes.
Democrats unanimously voted down a motion offered by Minority Leader John A. Boehner of Ohio that would have prevented them from waiving the rule, a move that tax-cutters said signaled the Democrats' intention to raise taxes between now and the 2008 elections.
"American taxpayers need to hold on to their wallets because the new House rules concerning taxes are not worth the paper they're written on," said Grover Norquist, president of Americans for Tax Reform (ATR).
"After spending an entire year on the campaign trail claiming she will not raise taxes, the first vote Nancy Pelosi brings to the floor for a vote as speaker will open the door to billions and billions of dollars of tax increases over the next two years," Mr. Norquist said.
Many liberal Democrats vowed in the midterm election campaigns to repeal the Bush tax cuts for those in the top income-tax brackets, and party leaders already have scheduled a vote to eliminate tax breaks for oil companies, which would effectively raise taxes on the nation's energy-producing corporations.
"The Democrats have a more established record of wanting to raise taxes than Republicans do. So to have them reject making the rule unwaivable indicates they want to preserve the option to raise taxes," said Jo Maney, spokeswoman for the Rules Committee, through which all legislation must pass.
"The Democrats were smart in crafting the new rules," said Dan Clifton, ATR's chief economist. "They did not change them but made additions to them. Now the three-fifths rule can be waived by a simple majority," or 218 votes.
"President Clinton got a bare majority 218 votes for his tax increases in 1993. So all the Democrats have to do is vote to waive the three-fifths rule, and they've got a tax increase," Mr. Clifton said.
Democratic officials saw Mr. Boehner's motion as a move to tie their hands on future tax policy, and the majority leadership effectively held all of its troops in line to oppose it, even though some of its members ran on pledges not to raise taxes.
"In the coming months, the Democrat-controlled Rules Committee will be pressured to repeal or waive the Contract with America's barriers against unfair tax increases to make it easier for the Democrat majority in Congress to raise taxes," Mr. Boehner predicted.
The Democrats also approved the so-called "pay-as-you-go" rule as part of the House rules package. The rule says that when taxes are cut, lawmakers must offset any revenue loss with either new or higher taxes elsewhere, or reductions in spending.
But the Committee for a Responsible Federal Budget said Friday that the pay-as-you-go rules "do not always work perfectly, and it may be useful to consider changes to improve the technical workings of [pay-as-you-go] to make it more effective."