Democratic leaders Sen. Harry Reid and Reps. Nancy Pelosi and Charlie Rangel should be thanking—THANKING—154 House Republicans.
Those Republicans—along with only two Democrats—refused to override President Bush’s veto of the State Children’s Health Insurance Program (SCHIP) legislation. And in so doing have made House Ways and Means Committee Chairman Charlie Rangel’s job a little easier.
See, Rep. Rangel has an AMT problem. That refers to the Alternative Minimum Tax that passed Congress in 1969 to ensure that wealthy people paid “a fair share” of income tax, but that now threatens a substantial portion of the middle class.
The problem is that the AMT was never indexed for inflation, plus the Bush tax cuts lowered the taxes of the middle class, thus exposing more of them to the AMT. As a result, the affected population has exploded from a few hundred people initially to 26 million this year, all of whom will be paying more taxes unless there is an AMT fix.
Since Rangel comes from high-income New York City, his constituents are disproportionately affected.
Rangel has a proposal that he claims would rescue about 20 million people who would otherwise be hit by the AMT, saving them some $50 billion in additional taxes.
However, under the current “paygo” (pay as you go) rules, such savings have to be offset with spending cuts or “revenue enhancements” (i.e., increased taxes).
By the fact that President Bush vetoed, and House Republicans sustained it, the Democrats’ SCHIP legislation that would have increased SCHIP spending by $35 billion ($30 billion more than President Bush wanted), Republicans have, in essence, “found” more than half of the money Rangel needs.
In other words, by rejecting that additional $30 billion in SCHIP spending, Republicans have just made it much easier for Rangel to fund his AMT reform. That’s called a win-win.
And Rangel and the Democrats can say they helped low-income children and millions of middle-class families—thanks to Republicans sustaining the president’s veto.