House GOP Offers Parting Gift to Reid, Senate Dems on Budget

Late Tuesday, House GOP leadership unveiled its proposal to extend government funding through mid-December, avoiding a potential government shutdown at the end of the month. Leadership plans to vote on the massive funding measure on Thursday, just over 24 hours after its public disclosure. If enacted, Congress would have to again revisit government spending just before the end of the year, after the midterm elections, but before a new Congress is sworn in. The GOP plan guarantees Harry Reid one more opportunity to shape the federal budget before, potentially, giving up control of the Senate.  

The current “continuing resolution” (CR) authorizing government spending expires on September 30. The House GOP plan would extend spending authority until December 11. House Appropriations Chair Rep. Hal Rogers has said the spending bill will be “clean,” i.e. it won’t contain any changes to federal policy. It will extend the charter of the Ex-Im Bank until June 2015 and continue the ban on state and local taxes on Internet access charges through mid-December. 

Congress will have to pass another spending bill before the end of the year to avoid a government shutdown. It would also have to take action to extend the Internet access tax ban beyond this year as well as any planned action to offset another round of spending cuts set to take affect in January. Any action in December will take place under the current Congressional make-up, i.e. with approval of a Democrat-controlled Senate. 

Multiple sources on Capitol Hill say that the House GOP plan is predicated on the assumption that the Republicans will take control of the Senate his November. According to multiple press reports, the GOP wants to put off any real fights over the budget until after its political position is strengthened in the midterms. Which begs the question; why set up another potential budget showdown before political reinforcements arrive?

Many conservatives on and off the Hill have expressed concern that the House GOP timeline provides a window for politically unpopular items to be enacted before the new Congress is sworn in. A spending extension through March, for example, would push all budget debates until Republicans have more leverage in Congress. The inclusion of the extension of the Internet access tax ban through December may be a tip-off for what to expect after the midterms. 

Many Senate Republicans favor federal legislation allowing states to collect sales taxes on online transactions. Because of a Supreme Court ruling, states, for the most part, need Congressional approval to force retailers to collect these taxes. Earlier this year, supporters of the online sales tax proposed merging this legislation with a permanent ban on Internet access taxes, i.e. the monthly fee consumers pay for online access. 

The need to extend the access tax ban at the end of the year provides a convenient vehicle to include the sales tax provisions. Politically, this new tax would happen while the Democrats still controlled the Senate. Republicans could get the tax while minimizing the political fallout for the party. 

One can extend this practice through a number of pressing issues, including amnesty, gasoline or cigarette taxes or spending initiatives. Lame duck sessions in both 2010 and 2012 both witnessed tax and spending changes that raised taxes and increased federal spending. 

Even setting aside the real potential for political mischief during the lame duck, it makes little sense to consciously give your opponents one final chance to shape federal spending before they lose a significant amount of political power. If Senate Democrats get wiped out in November and lose a dozen seats, Harry Reid can still threaten a government shutdown at the end of the year without GOP concessions on a longer continuing resolution.

Perhaps the greatest weakness in the latest House GOP plan is that it reveals a party in fear of its own shadow. It continually argues that it should avoid near-term debates until some time in the future when its political position is strengthened. Yet, even when it expects its political position to be stronger, it opts to put off a fight.