Another Estate Tax Vote Unlikely During This Congress

With Congress now in its final week before adjourning for the midterm elections, the death knell may finally be sounding for the "trifecta" package ( The trifecta passed the House in late July, but it failed in the Senate, falling three votes short of the 60 necessary to end debate, entirely on account of the estate tax provision. Two weeks ago, Senate Majority Leader Bill Frist (R-TN) asked four of his colleagues -- Finance Committee Chair Charles Grassley (R-IA), Budget Committee Chair Judd Gregg (R-NH), and Sens. Jon Kyl (R-AZ) and Trent Lott (R-MS) to find ways to sweeten the package for Democrats and move the proposal forward. But the group came up with no such recommendations, and all acknowledge that the trifecta package is dead, at least until after Congress reconvenes on Nov. 14 in a post-election lame-duck session. Lott, for his part, floated the idea of adding language opening up the Outer Continental Shelf to oil and natural gas development. The idea was that this provision would make it hard for Sen. Mary Landrieu (D-LA), who voted against the trifecta, to oppose the package a second time. But this idea did not take and, in any case, would still have left the measure two votes short. Similar gambits were tried before the Senate's August vote -- such as tax breaks for the lumber industry aimed at Sens. Maria Cantwell (D-WA) and Patty Murray (D-WA) -- but in the face of these and subsequent efforts, the Democrats remained remarkably united in their opposition to repeal of or significance cuts to the estate tax Over the past month, there has been a rising chorus, led by Grassley and Senate Finance Committee Ranking Member Max Baucus (D-MT) to sever from the bill the popular tax extenders -- including such elemental tax breaks as the research and development tax credit, and the deductions for college tuition and state sales taxes -- and allow a stand-alone vote on the full extenders package. Grassley has been disappointed twice this year, when Frist removed the extenders first from the $70 billion tax reconciliation measure (PL 109-222) passed in May and then from the pension overhaul bill (PL 109-280) passed in July, after having been promised by Frist that they would be included in these measures. And in the last two weeks, Frist batted away three bids by Baucus to bring the extenders to the Senate floor as a stand-alone bill. Frist is unlikely to abandon what he considers the legislative leverage of the extenders, which represent a perfect vehicle for him to continue to push for a drastic reduction to the estate tax because they carry such universal appeal. This recalcitrance, however, may prove harmful to GOP candidates in close races this year, bristling under the yoke of the "Do-Nothing" Congress label. Grassley couched his last-ditch appeal last week to get a separate vote on the extenders in starkly electoral terms. "I think that people up in '06 ought to be concerned about the extenders, because it's pretty easy to make a 30-second commercial about Republicans not delivering on tax exemption for college tuition, tax deduction for teachers' supplies, and R&D," Grassley told CongressDailyAM. Some congressional GOP candidates are hinting that they agree with Grassley and hope that Frist will relent. "If the trifecta's out, we need to see the extenders move," Rep. Kevin Brady (R-TX) said in September 22nd's CongressDailyAM. Texas is one of eight that relies on the state sales tax for its revenue and therefore would particularly benefit from an extension of the state sales tax deduction. Reportedly, there have been staff-level discussions about moving the extenders separately among some GOP Senators up for re-election this year -- including Mike DeWine (R-OH), Olympia J. Snowe (R-ME), and Kay Bailey Hutchison (R-TX) -- who may side with Grassley this week. However, even the electoral appeals of his colleagues may not be enough to change Frist's mind. He may continue to hold out hope of keeping the trifecta intact until after the midterm elections and passing an estate tax cut gift-wrapped in the extenders package.
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