When it comes to work product, the modern Congress has accepted a standard of minimalism and mediocrity that would make Philip Glass and Don Knotts blush.
Forget about party alignment and control of the 113th Congress. Forget about President Obama or Mitt Romney. Forget about polls, focus groups, super PACs, swing states, TV ads, running mates, voter registration, and dog-eat-dog politics. Wrap your head around this cruel and economically terrifying reality: The ever-expanding list of must-do items in the lame-duck Congress that will follow this year’s election could take 3 percentage points off America’s gross domestic product.
You read that right—3 percentage points. Not 3 percent, 3 percentage points. You think the Supreme Court decision about Obama’s health care law is big?
Not compared to this.
Permit a momentary movie digression. In my all-time favorite movie, Network, TV executive Frank Hackett (played by Robert Duvall) is explaining why corporate overlords are unhappy with eccentric TV newsman Howard Beale, who has called into question the legality of a pending transaction worth $2 billion to the corporation. Another executive, Diana Christensen (played by Faye Dunaway), is dismissive of the idea that the corporation’s CEO, Arthur Jensen, would fire Beale over some business deal.
Diana: “He may be unhappy, but he isn’t stupid enough to withdraw the No. 1 show on television out of pique.”
Frank: “$2 billion is not pique! That’s the wrath of God! And the wrath of God wants Howard Beale fired.”
To paraphrase, 3 points of GDP is not pique. It may not be the wrath of God, either. But it’s a helluva lot closer to the latter than the former. It is not an exaggeration to say the direction of the entire U.S. economy, not just in 2013, but for years hence, will hinge on decisions taken by this lame-duck Congress.
Prepare to be terrified. Here is the list and their rough economic heft. Many current tax cuts or preferences expire on Dec. 31. Let’s start there:
- The Bush tax cuts (lowering marginal rates; cutting capital gains and dividend rates; easing itemization and exemptions, marriage penalty, and child tax credit relief). One-year impact: $166 billion.
- The 2 percent Social Security payroll-tax cut. One-year impact: $125 billion.
- The alternative minimum tax “patch.” One-year impact: $118 billion.
- Tax cuts from the 2009 economic-growth/stimulus law. One-year impact: $21 billion.
- Tax extenders for businesses. One-year impact: $20 billion.
- Increasing the estate tax from 35 percent to 55 percent on those valued at more than $5 million. One-year impact: $13 billion.
- 100 percent write-off for business investment. One-year impact: $8 billion.
The grand total falls just under $500 billion if you add $23 billion in new taxes linked to Obama’s health care law.
That’s only part of the nightmare lame-duck scenario.
- The $1.2 trillion in spending cuts to discretionary accounts over 10 years must be identified and approved.
- Approval of all 13 annual spending bills—worth roughly $1 trillion ($1.047 trillion according to the Budget Control Act, but House Republicans on Tuesday pressed for a cut to $1.028 trillion in spending, setting up immediate conflict with Senate Democrats).
- The so-called “doc fix” that will protect Medicare-participating doctors from a scheduled 32 percent cut in reimbursements. One-year impact: $30 billion (roughly).
- The transportation bill : The two-year Senate bill carries a $109 billion price tag and at least that much economic impact. Consensus estimates link 35,000 new jobs to every $1 billion spent on transportation.
- A debt-ceiling increase: The current $14.3 trillion debt limit could be hit in late December and force Congress to cut more spending to find the votes to raise it. Republicans have vowed no increase without more spending cuts.
All this to be accomplished in just 25 days, the likely number of working days after the election. All this while sore losers pout, new winners arrive, hyperaggressives plot leadership campaigns, and everyone tries to flip their lousy office space.
Lexus has built part of its business model around persuading otherwise sensible people that Christmas is the very best time of year to buy a luxury car, using the slogan “A December to remember.”
It will be one like this city, this country, and this economy have never seen before.
This article appears in the April 25, 2012, edition of NJ Daily.