Tuesday, June 14, 2011

Very interesting fight among Senate Republicans

With thanks to Tax Prof Blog for the link, I note with considerable interest a current battle in the Senate, in which I gather Republicans' votes will be front and center. Senator Tom Coburn is seeking the elimination of ethanol subsidies that include income tax expenditures, but is being opposed by Grover Norquist due to the no-new-taxes pledge, signed by 40 of the Senate's 47 Republicans and constituting, in my view, a tourniquet around the throat of long-term (and perhaps even short-term) U.S. fiscal sustainability.

Oh, yes. Norquist is on board with eliminating tax expenditures for ethanol, but only so long as Congress ALSO repeals the estate tax. Good one, you Lenin-lover, you.

Coburn's view, which is unambiguously logically correct, is that, even if you are categorically opposed to "tax increases," this has to be defined with at least some modicum of intellectual coherence, such that repealing what are effectively "spending" provisions smuggled into the tax code won't count as tax increases for this purpose. (See more on this point in my recent Tax Notes article, which is available here.)

An alternative view to the one that both Coburn and I take would mean one only cared about the form of particular policies on the books, not about actual economic substance.

I gather that Coburn's plan is not expected to pass. Indeed, the Obama Administration, earning a profiles-in-courage award as usual, apparently opposes the elimination of ethanol subsidies. Nonetheless, it would be a huge positive step if more Republicans adopted the Coburn view (which also was discernible in Congressman Ryan's budget document). Coburn thus deserves great praise on this score, even apart from the ethanol subsidies issue itself (on which he likewise is siding with the angels).

UPDATE: The Coburn amendment failed by one vote. That is, it won (under majoritarian rules) by 59-40, but this left it one vote short of the threshold needed to permit closure and thus avoid filibuster. And of course the Senate these days codes it as a loss if you merely win by a borderline landslide.

I wonder, however, if the amendment was guaranteed to lose by one vote no matter what. The Democratic and/or Republican leaderships may have decided (perhaps even cooperatively) to let as many people as possible vote for it, so they could score a good-guys stance with the voters, so long as it didn't actually prevail. This once happened with the balanced budget amendment in the 1990s - it lost by one vote, but reportedly would have lost by one vote even if it had attracted 10 more "true" supporters.

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