Congress has adjourned until after the election without voting on an extension of the Bush tax cuts.
Background: In the Spring of 2003 the economy had been weak and unemployment had been rising for more than two years in the wake of the tech stock collapse and the terrorist attacks of 9/11/01. To boost economic growth and hiring President Bush asked Congress to enact sweeping tax reductions for everyone who pays income tax (roughly 60% of Americans.) Included were reductions in taxes on dividends and capital gains, reductions in each of the progressive tax bracket rates, and an increase in the per child tax credit.
Congress was closely divided with a few Republicans, including Senator John McCain speaking against the tax cuts. Bush finally attracted a couple of wavering Senate votes by amending the tax cut bill with a time limit.
Time runs out December 31. If Congress does not act all tax rates will revert to their previous levels on January 1.
For years the Democrats have used misleading communication to deceive people who don’t have the time or inclination to pay attention to arcane tax issues. The deceptive message was that the Bush tax cuts were only for the rich. Recently, as the deadline looms the Democrats have had to admit that all tax rates were reduced, that every taxpayer got a break, and that if Congress fails to act every taxpayer will suffer a substantial increase.
So, the Democrats who control Congress with huge majorities in both houses will now hit the campaign trail having failed to write legislation that would extend any of the tax cuts.
Nobody knows what will happen after the election when Congress comes back for a lame duck session. Democratic leaders promise to extend the tax cuts for everyone but the rich. But they’ve been making that same promise for over a year and haven’t acted yet.