Capitol Hill

Winston Churchill once said, "Democracy is the worst form of government—except for all the others." He easily could have been describing the near paralysis in Congress regarding issues important to NRCA members. The incidence of public-supported legislation stalling in Congress because of a lack of a handful of votes has become more frequent. And with fewer than 20 legislative days before Congress adjourns for November elections, Republican leaders in both chambers are trying to find legislative "blends" that will ensure passage of politically popular proposals such as small-business health plans (SBHPs) and permanently lowering the estate tax ("death tax").

Estate tax

As mentioned in the August Capitol Hill column, on June 8, the Senate fell three votes short of the 60 needed to invoke cloture to end filibustering and proceed to an up-or-down vote on HR 8, which would repeal the estate tax entirely. The June 8 vote proved getting 60 votes for complete repeal of the estate tax is not possible and a compromise would have to be pursued.

On June 22, the House passed HR 5638 sponsored by House Ways and Means Committee Chairman Bill Thomas (R-Calif.) to permanently lower the estate tax by raising its exemption to $5 million per individual and $10 million per couple, with a 15 percent capital gains tax rate for estates valued between $10 million and $25 million and a 30 percent capital gains tax rate after that. Although Sen. Jon Kyl (R-Ariz.) offered a similar proposal in the Senate, the 60-vote threshold remained unattainable, and it was clear a permanent lowering of the estate tax would have to be combined with other "must-pass" legislation.

Minimum wage and SBHPs

While the estate tax issue stalled in the Senate, nearly 50 House Republicans—mostly from the Northeast—wrote to House Speaker Dennis Hastert (R-Ill.) demanding an opportunity to vote for a federal minimum-wage increase before Congress adjourned for its August recess and threatening to block adjournment if such a vote were not scheduled. The current minimum wage of $5.15 per hour has been in place since 1997, and these Republicans feared their election opponents would pound them on the issue if Congress failed to act.

During the last week in July, House Republican leaders relented and indicated they would support packaging a minimum-wage hike with HR 525, the Small Business Health Fairness Act, to allow SBHPs. But Senate Republican leaders signaled it would be difficult in such a short time period to work out differences with the Health Insurance Marketplace Modernization and Affordability Act, S 1955, which would create SBHPs but failed to get 60 votes in May.

Tax cuts and pension legislation

Knowing most Republicans favor an estate tax cut but oppose a minimum-wage increase and most Democrats oppose an estate tax cut but favor a minimum-wage increase, Thomas combined both proposals into one bill—HR 5970. But he also believed "sweeteners" were necessary for passage and added tax breaks for endeavors such as mine safety and timber operations. In addition, Thomas expropriated the research and development tax credit and other tax credits needing to be extended from pension reform legislation and added them to HR 5970.

This did not please members of either party who had participated in a Senate and House pension reform conference committee during the entire 109th Congress; but on July 28, the House passed a pension overhaul bill, HR 4, minus its tax credits, and on July 29 passed HR 5970.

A setback

Unfortunately, on Aug. 3, Democrats defeated HR 5970 by a 56-42 vote, leaving Republicans four votes shy of the 60 needed for cloture. In fact, Republicans were three votes down because Majority Leader Bill Frist (R-Tenn.) switched his vote to "no" for procedural reasons, allowing him to bring up the bill again. It is unlikely Frist will do so, but there is a possibility SBHPs could resurface between now and October.

Craig S. Brightup is NRCA's vice president of government relations.