Before the Presidents Day congressional recess, both houses of Congress voted to pass legislation extending a 2 percent cut in the amount employees must pay into Social Security.
This payroll tax holiday now continues through the end of 2012. The bill also extended unemployment benefits and postponed a cut in doctors reimbursement payments. The unemployment benefits and the so-called doctors fix had an offset in place so that they dont add to our deficit.
The 2 percent payroll tax holiday, which has a price tag of about $100 billion, was not offset and therefore that cost gets added to our federal debt. In a little-mentioned section of the bill, Congress repealed billions of dollars in recent changes to corporate estimated tax payments. The legislation repeals corporate estimated tax-payment shifts scheduled to occur in the third quarters of 2012, 2014, 2015, and 2019.
The changes in the corporate tax-payment timing were done to help fund various bills, including the Hiring Incentives to Restore Employment (HIRE) Act and to meet Congress's pay-as-you-go budgeting rules that apply to a five-year window for financing.
The House voted 293-132 to pass the bill, HR 3630, and the Senate followed soon after to approve the bill in a 60-36 vote. The president signed the bill almost immediately after it arrived on his desk.
The repeal of the corporate estimated tax payments is the provision of the bill that really rubs this writer the wrong way. The reason is this: Those tax payments were put in place to pay for particular programs by Congress. Now those programs will live on, but the payment for them is now made null and void. Isnt this how our debt got so big in the first place?
The scenario I am complaining about has played out dozens of times in Congress. Each time, the corporate taxes are altered to be used as payment for a program, but before the payment comes due, Congress forgives the payment, but doesn't stop the program from going into effect. It goes into effect, but now it isnt paid for, or offset.
These budget gimmicks are not unique, and in some circles on Capitol Hill they are hailed as brilliant. These budget gimmicks are described as pay-fors or offsets for programs at the time the bills are making their way through Congress. These budget gimmicks raise money, so therefore,at the time they are being presented in Congress, they serve a valuable purpose --that being, that they allow Congress to profess that the programs they are touting are fully offset and dont add money to our deficit. These gimmicks are however just that gimmicks!
Maybe the next time members of Congress use the funding source of estimated corporate taxes, they should also commit to actually allowing the payments to be made. Thereby honestly paying the tab for the programs, instead of claiming the bills will be paid, but then cancelling the funding source.
Stay tuned to see if Congress heeds this simple bit of advice.
Elizabeth B. Letchworth is a retired, elected United States Senate secretary for the majority and minority. Currently she is a senior legislative adviser to Covington & Burling, LLC and is the founder of GradeGov.com