When Congress returns from its summer recess, it will take up two core components of President Bush's second-term domestic agenda: making repeal of the death tax permanent and creating personal retirement accounts. The administration's general position on both issues is well-known - it supports both - but where it stands on the legislative particulars remains a mystery. If the president hopes for legislative success on these two controversial issues, it is time for the White House to forcefully guide its agenda though Congress.
When the Senate returns, it is scheduled to decide whether to shut off a filibuster on a bill that repeals the death tax permanently starting in 2011. (Under the current law the death tax will be repealed for just one year, 2010, before springing back to life at 55 percent in 2011.) The White House continues to state the president's general support for permanent repeal, but it is not clear where the administration stands with respect to the real choice the Senate is facing: Would the administration prefer a compromise - as the "pro-growth" tax-cutting senator from Arizona, Jon Kyl, proposes - that immediately lowers the death tax rate from 47 percent to 15 percent and leaves the tax permanently on the books? Or would it prefer to go for full repeal, which the Democrats will likely block and thereby make it a major issue in the 2006 elections?
Senate Republicans need guidance from the White House because this question is splitting the coalition to kill the death tax. Some former stalwarts of permanent repeal aren't willing to wait any longer for immediate relief. They fear they won't live long enough to see the tax eliminated. They are cool to a long-range strategy to repeal the tax by defeating incumbent senators who oppose repeal. Therefore, they are pushing Senate Republicans hard for a compromise deal right now.
Other proponents of permanent repeal do not feel the urgent need for relief. They oppose a compromise deal because they believe any deal would prove temporary, and the death tax would creep back up to higher rates if it is not completely removed from the tax code. Their strategy is to force a vote on permanent repeal this year, and if they fail to garner the 60 votes required to shut off debate, then they will take the names of those who voted no and defeat them the next time they stand for re-election. If proponents of killing the death tax were to succeed in defeating a couple more vulnerable senators, as they helped defeat Sen. Tom Daschle, D-S.D., over the death tax in 2004, it would impress on the rest of the herd that it is political suicide to vote against permanent repeal.
My colleagues at the Free Enterprise Fund believe there is still a shot, albeit a long shot, at winning permanent repeal in the Senate this year, but it will necessitate extraordinary Republican cohesion and require the administration to pull out all the stops to get it done.
Seeing no evidence that the administration is prepared to do the heavy lifting required to ensure immediate permanent repeal, the folks at the fund are floating the idea of granting immediate but temporary relief by using the reconciliation process. They suggest dropping the death tax rate to zero beginning in 2006 and keeping it at zero through 2008, when the tax would increase to its scheduled rate of 45 percent and then to 55 percent as provided for under current law. This strategy helps those in need of immediate relief so they stop clamoring for a deal, and it keeps the death tax alive politically as an issue by giving proponents of permanent repeal a vote to hold senators accountable in the 2006 elections."
The folks at the fund suggest this be done through the congressional reconciliation process. Under Senate rules, a filibuster is prohibited on a reconciliation bill, which means it only takes 50 votes to pass it instead of the usual 60. Although the rules also preclude repealing the death tax permanently inside a reconciliation package, it would allow immediate temporary relief to be achieved by a simple majority vote.
I hope we hear something from the administration soon. The supporters of the death tax are becoming increasingly aggressive - on Monday The New York Times even had the nerve to call a permanent 45 percent rate a compromise. Senate Republicans need White House guidance to form a coherent plan to kill the death tax.
(Next week I will discuss Social Security and personal accounts.)