The Real Reason the Bush Tax Cuts Were Temporary

In 2001, George Bush Jr. took the oath of office.  He offered a tax cut proposal that was introduced into the Congress.  In it he did a lot of things, most discussed of which was lowering the top rate charged on ordinary income from 39.6% to 35%.  All of the proposed tax cuts were voted to take effect and last for ten years.  Why weren't they implemented permanently?

There is much talk about how Bush sold the cuts by making them temporary.  The real reason they weren't made permanent and why Congress is now considering the second extension to those cuts is very different.  It has to do with two very important numbers.  They are the number 60 and the number 50.

50 is the number of Senators you need to vote for something in order for it to pass if there are 50 votes against, when your party has the Vice Presidency and can cast the tie-breaking vote.  But because the partisan breakdown in Washington, D.C. has become so complete, any bill going through the Senate really needs 60 votes to pass.  That's the number needed to invoke cloture.

Cloture is a process where the Senate limits the debate on a proposed piece of legislation to prevent something called a filibuster.  A filibuster is when the party in the minority in the Senate will keep speaking on a pending issue to prevent a vote from being called.  One of the most famous filibusters in history was when the Civil Rights Act of 1964 was being considered.  18 Democratic and 1 Republican Senator spent 57 days filibustering to prevent this bill from coming to a vote.  On June 10, 1964, Senator Robert Byrd (D-W.Va) ended a filibuster speech that had lasted over 14 hours.  Eventually cloture was invoked (it took 67 votes back then).

So now it routinely requires a vote of cloture to pass any contentious piece of legislation offered in the Senate.  But there's an exception.  Debate on budget bills in the Senate is already limited to 20 hours.  This is known as "reconciliation".  But thanks to the Byrd rule (remember we just heard that name), any bill passed using the reconciliation process is limited.  The Byrd rule says that reconciliation can't be used for any bill that would increase the budget deficit beyond 10 years after the reconciliation measure.

President Bush Jr. did not have 60 votes in the Senate in favor of his tax cuts.  But by using reconciliation, Senators who were supporting the cuts were able to pass them, albeit with the Byrd rule limitation that they would have to expire in 10 years.

That's the real reason why Congress is once again debating whether or not to extend these tax cuts.

By the way, I'm of the opinion they should be allowed to expire.  That 4.6% in additional income tax on the highest income earners isn't going to stop job creation.  It isn't going to harm those people in any serious way.  But it will help to start the process of our government learning to live within its means.