The Catholic University of America
Associate Professor Stephen Schneck, director of the Life Cycle Institute and chair of the politics department, is quoted in the following story from Bloomberg news service.

Republican Splits May Hurt Pensions Measure, Election Prospects

From: Bloomberg
Date: July 31, 2006
Author: Laura Litvan

Feuding among congressional Republicans threatens to derail two of their legislative priorities and may damage the party's chances of retaining control of the U.S. Congress in the November midterm elections.

The once-united Republicans were unable last week to come to an agreement on legislation overhauling the U.S. pensions system, and House leaders said they would continue to hold public hearings to criticize the immigration measure approved by the Republican-led Senate.

Just a year and a half after Republicans increased their majorities in both chambers in the 2004 elections, plans for overhauling Social Security, the tax code and medical malpractice have been abandoned or postponed. The bickering over pensions and immigration may heighten the anti-incumbent mood and frustration with Republican control that are increasingly evident in public opinion polls.

"The Democrats will point out that the Republicans conduct the whole orchestra -- president, Senate, House, and for the most part, the courts -- but that they have not played a note,'' said Stephen Schneck, the chairman of the politics department at Catholic University in Washington.

Days before leaving Washington for a five-week summer recess, House Republican leaders announced last week that they would continue to hold an unprecedented series of hearings to air their objections to the Senate immigration legislation, which combines a path to citizenship for illegal aliens with border-security provisions. The House passed a measure that only addresses border enforcement.

Estate Tax

The agreement on pensions was scuttled last week by a dispute over another Republican priority: reducing the estate tax.

As the top tax-writers in the House and Senate neared agreement on the pensions legislation, Senate Majority Leader Bill Frist, a Tennessee Republican, maneuvered to remove from the measure a provision that renews $38 billion of popular tax cuts.

The tax-cut extensions, which enjoy broad bipartisan support, were added to legislation permanently cutting the estate tax, along with an increase of the minimum wage to $7.25 an hour from $5.15. In June, a Senate measure containing only a repeal of the estate tax came just three votes shy of the 60 required for passage, and Republicans said that adding the tax and minimum-wage provisions may draw enough Democrats to allow the measure to pass. Republicans control 55 votes in the 100- seat chamber.

'Knife in the Back'

The maneuver ignited a furious dispute among Republican leaders. Senate Finance Committee Chairman Charles Grassley, an Iowa Republican who worked for more than four months on the pensions legislation, said the removal of the extensions was a ``knife in the back'' from House Ways and Means Committee Chairman Bill Thomas, a California Republican who supported the enhanced estate-tax measure.

House Republican leaders sided with Thomas, pushing the estate-tax, minimum-wage and tax-cut extension through the chamber on July 29.

The House also cleared a new pension measure, bypassing House and Senate negotiators who had dissolved their deliberations after the dispute over the tax extensions. Because it wasn't approved by those lawmakers, the new pensions measure can be amended in the Senate and any modified legislation would then have to be renegotiated by both chambers and voted upon again by the House, a process that could delay passage of a final measure indefinitely.

'50-50' Chance

The estate-tax and pensions legislation will be considered by the Senate this week. The pensions measure, which is backed by Democrats such as Senator Ted Kennedy of Massachusetts, has a "50-50'' chance of passage, said Brian Graff, president of the Arlington, Virginia-based American Society of Pension Professionals and Actuaries.

Prospects for the estate-tax legislation are even more uncertain. Frist said the vote this week "will represent the last best hope for Americans who deserve a tax system that does not punish success by imposing overwhelming and crushing taxes when someone dies.''

Democrats, however, denounced the estate-tax legislation. Senate Minority Leader Harry Reid of Nevada said the inclusion of the minimum-wage increase amounted to ``blackmail,'' and predicted the measure would be defeated. "The Senate has rejected fiscally irresponsible estate tax giveaways before and will reject them again,'' Reid said in a statement.

Public Discontent

The divisions may cost Republicans. A poll conducted by CBS News and the New York Times showed that 45 percent of registered voters said they would back Democratic candidates in the November congressional elections, while 35 percent said they would back Republicans. Fifty-eight percent of registered voters disapprove of the job Congress is doing, according to the poll conducted July 21-25.

If the pensions and estate-tax measures are defeated in the Senate, ``Republicans will have a threadbare record to take to the voters,'' said Thomas Mann, a congressional scholar at the Brookings Institution in Washington.

Clashes between Republicans in the two chambers have erupted several times this year. In one instance, House Majority Leader John Boehner, an Ohio Republican, told reporters that his constituents thought a Senate Republican proposal for a $100 gas-tax rebate was ``stupid'' and ``insulting.'' Frist, who introduced the proposal, eventually withdrew it.

Businesses

The split that has emerged over pensions is worrisome, business lobbyists say, because it threatens to block one of their key goals for the year. The House is planning to recess for the elections on Sept. 29, a week earlier than the Senate, and neither chamber will resume work until early November, leaving little time to complete a pensions deal, they said.

Separating the tax-cut extensions from the pensions measure is "crazy,'' said Aliya Wong, a pension lobbyist for the U.S. Chamber of Commerce, a Washington-based trade group that represents more than 3 million U.S. businesses. "I don't think it's feasible. It endangers the whole bill.''

Charles Gabriel, a senior political analyst at Prudential Equity Group in Washington, said corporations are eager to have clarity on the new rules. The pension measure would force more than 30,000 U.S. companies to put additional money into pension funds they provide for about 44 million workers.

'Up in the Air'

"It throws everything up in the air,'' said Gabriel. "With the House leaving, it somewhat jeopardizes the pension bill, and also the extenders.''

The House-passed estate-tax measure would gradually increase the threshold for triggering the levy to $5 million from $3.5 million between 2011 and 2015 and impose rates between 15 percent and 30 percent. The tax currently assesses rates of up to 46 percent on estates valued at more than $2 million. Unless Congress acts, the tax is scheduled to have rates as high as 55 percent on estates valued at more than $1 million in 2011.

The measure also would renew two dozen-expired tax breaks, including a research credit for businesses that is popular with both Republicans and Democrats.

The rift over pensions comes after months of wrangling on border-security legislation. House Republican leaders are refusing to appoint negotiators to hammer out a compromise with the Senate until they have conducted two months of unusual field hearings to try to build a case with the public against the Senate measure.

'Secure the Borders'

House Speaker Dennis Hastert, an Illinois Republican, visited the U.S.-Mexico border this month, and he and Boehner announced plans last week for nine House committees to hold 21 hearings in 13 states in August. "Before we can look at other immigration issues, we first must secure the borders,'' Hastert said.

Some of the rifts appear to be caused by the competing agendas of Republican leaders, Gabriel said.

On the tax measures, Thomas has wanted to push the estate- tax cuts through Congress as one of his final accomplishments before he retires in January. Frist is considering a bid for the presidency in 2008, and the estate-tax issue appeals to the party's conservative base.

"With all the bad will this is creating this could really mess things up for the rest of the year,'' Graff said. "With the Republicans in the House and Senate hating each other it's getting pretty ugly.''

###