The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Who's the Obstructionist?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


While I tend to write mostly about healthcare issues, a November 27 article from Investor’s Business Daily, entitled “Obama Taking Hard Line, Blows Up Bipartisan Tax Deal,” provides a brief look into what the next two years will be like.  Says Investor’s: The White House move this week to torpedo a deal between House Republicans and Senate Democrats to extend dozens of expiring tax breaks suggests that the executive action legalizing 5 million unauthorized immigrants may have been no fluke: Compromise appears to be near the bottom of President Obama's agenda for his last two years in office.”

Keep in mind it was soon-to-be-former Majority Leader Harry Reid (D-Nev.) that was shepherding this bill through the Senate but with the veto threat, there are not enough votes (two-thirds from the House and the Senate) to override a presidential veto.  The tax extenders package is as good as dead for 2014.

I am not arguing whether all or parts of the tax extenders legislative package are valid, but if Obama can’t even work with a Democratically-controlled Senate and pass a bi-partisan bill, what will he do when the GOP takes over the Senate in January? This doesn’t bode well for other issues that Americans want, such as repealing and replacing ObamaCare, immigration reform, and so forth.

Investor’s hypothesizes that because of the Republican wave, Obama is moving further to the left (if that is even possible) and make it harder for the GOP to get anything done.  This is completely the opposite of President Bill Clinton who worked with a Republican congress – albeit with many acrimonious and partisan fights – and had successes such welfare reform and balanced the budget.

While Obama is following the Elizabeth “Hiawatha” Warren’s battle cry that the tax breaks are nothing more than “a massive handout to big corporations” leaving it to “working families to pick up the tab,” there are popular  provisions in it that also affect families such as making permanent an expanded deduction for users of mass transit and tax-free charitable contributions from tax-protected retirement accounts.  Investor’s writes, “While the bulk of the value of the tax breaks do go directly to corporations, helping out working families only indirectly, it's unfair to charge that ‘there's nothing in the deal for the little guy,’ said Keefe Bruyette & Woods policy analyst Brian Gardner.”

Investor's writes that corporate tax breaks include a “$160 billion provision to make permanent and expand a research and experimentation tax credit, an idea that the administration has supported” and two provisions worth “about $73 billion over 10 years [that] would make permanent the American Opportunity tuition tax credit and an allowance for small businesses to write off capital investments permanently.”

The United States has the highest corporate tax burden in the industrialized world, approximately 35 percent.  Certainly overall tax reform is needed that will lower the corporate rate and flatten it, getting rid of many special interest tax breaks, including some that are in the tax extenders’ package. It likely means, as long as Obama is president, we will not see tax reform for American citizens and businesses. But for now businesses, who thought a tax extenders bill was on its way to passage, are facing tax increases that will not be good for the economy and job creation.

Only if enough Democrats revolt and override vetoes by the president, will anything be accomplished.

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