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Reviewing a Do-Nothing (Right) Congress

Posted By J.D. Foster, Ph.D. On October 1, 2010 @ 1:30 pm In Economics | Comments Disabled

As Members of Congress limp out of Washington to face their constituents, it’s worth reviewing their accomplishments—or lack thereof.

The most basic function of Congress is to manage the public purse. The most basic step in managing finances—whether of a family, a business, a state, or a nation—is to pass a budget identifying expected revenues and intended outlays. As per his responsibility, the President laid out his budget in great detail in January. For the first time in modern memory, the House of Representatives did not even attempt to pass a budget. The Senate did not even attempt to pass a budget. With deficits pushing $1.4 trillion and the national debt soaring, House and Senate leadership did not dare tell the American people what they intended, and the members of the majority party went along. Doing nothing became their best option.

Of course, in other areas Congress has been very active. It pushed up spending over and again in a vain pursuit to stimulate the economy with more debt. As expected, it failed, the economy languishes, and unemployment remains very high.

Congress passed a financial regulatory reform bill that, had it been in effect earlier in the decade, would have done nothing to stop and little to mitigate the financial crisis of 2007–2008. And it passed a health care reform so ill-advised that Democrats are now campaigning against it. Doing nothing would have been better.

And then there is tax policy. When this Congress began its work in 2009, high on the agenda was the expiration of the 2001 and 2003 tax relief at the end of 2010. This was no surprise. It was known nine years ago that Congress would face some important decisions on tax policy, and it was generally assumed that nothing would be done until the last minute, because that is how Congress works. In January 2009, the clock began to tick on the last minute. All through the year, congressional leadership postured while the President speechified.

As 2010 dawned, something special took place: The death tax died. The various compromises and maneuverings came to naught, and for one year Americans could pass into eternity without Uncle Sam giving one last whack. The respite, however, was a brief one as the death tax reaps again in 2011 unless Congress acts. Congress, however, prefers to do nothing.

The legislative year now draws to a close but for the frightening prospect of a lame duck session. Still, Congress does nothing about tax policy. The clear intention of the congressional leadership is to allow all the 2001/2003 tax provisions to expire—higher income tax rates, slashed child tax credit, higher rates on investment income, restored death tax—almost certainly sending the economy back into recession and all with President Obama’s silent acquiescence. On yet another issue, the President has chosen not to lead. Yet again, Congress prefers to do nothing.

No doubt Members of both the House and the Senate will do all they can to force some sort of compromise in the lame duck session in December, perhaps a two-year extension of all provisions—but not if the Democratic leadership can help it. They won’t suffer devastation at the polls only to backtrack later.

To understand their lack of action, one need only ask the simple question: Why? There are many possible answers: a delight in redistributionism, a disregard for economic incentives. But the biggest reason may go back to their refusal to pass a budget—they need the money. Having pushed federal spending (and thus the budget) to unsustainable levels, to keep spending high they either let taxes jump up by doing nothing now or raise taxes later through their own legislation. Despite the high stakes, yet another do-nothing Congress.


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