Update on Key Fiscal Issues for FY 2015 in This Lame Duck Session of Congress

By Carolyn Burstein
December 08, 2014

The two major fiscal issues requiring action in this lame-duck congressional session are the 55+ so-called “tax extender” breaks that expired in January 2014 and the passage of a federal budget for 2015. Regarding the latter, the Continuing Resolution (CR) passed in September expires on December 11, 2014.

Tax Extenders

Let’s consider the $41.6 billion “tax extenders” package first, since it passed overwhelmingly in the House on December 3and was sent to the Senate, whereas the federal budget for 2015 may go down to the wire in both houses of Congress.

The 378-46 vote in the House will retroactively extend all tax breaks for 2014 and will force Congress to deal with more ambitious efforts to handle these issues next year. The House vote sends the package (H.R. 5771) to almost certain approval in the Senate because hopes of (as well as opposition to) a two-year alternative plan that was being negotiated in the two tax-writing panels in the Senate and House became the first collateral damage of the president’s action on immigration.

Because this “tax extender” agreement [negotiated prior to President Obama’s executive action — primarily between Senator Ron Wyden (D-OR), Finance Chairman, and House Ways and Means Chairman Dave Camp (R-MI)] did not include a permanent extension of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) in its final form, Sister Simone Campbell, in an op-ed article in The Hill, made NETWORK’s position on this issue clear. Failure to include the permanent extension of the EITC and CTC while permanently extending tax breaks for business rendered the agreement deeply flawed and worthy of the president’s veto, said Sister Simone. Because of the collapse of tax negotiations following the president’s message on immigration, a veto now is unnecessary. “We are open to short-term extensions of many of those provisions,” Obama has recently said.

The one-year retroactive renewal includes tax breaks for corporate research, wind production, renewable fuels, corporate expensing and expanded depreciation schedules. It also includes tax breaks for individuals, such as deductions for mortgage debt forgiveness and for state and local sales taxes as well as tax breaks for certain businesses, such as racetrack builders and the rum industry in Puerto Rico and the Virgin Islands.

Many Senators appeared willing to support the short-term measure and agreed with Representative Sander Levin (D-MI) who said, “To not act would disrupt the coming tax-filing season for millions of American workers and businesses, which have relied on Congress to extend these provisions and will, in a matter of weeks, begin filing their 2014 tax returns.”

Federal Budget

On the second fiscal issue facing this current lame duck session of Congress – passage of a federal budget – it is likely at this stage of the process that a hybrid bill, known as a “cromnibus” package (because it consists of 11 full spending bills and one CR of two-or-three months’ duration for the Department of Homeland Security) will be presented for votes the week of December 8 in the House and Senate. Regardless of the best of intentions, moving a huge year-end spending package through Congress requires trade-offs among appropriators in both parties and will be subject to the inevitable “riders.”

Senate Appropriations Chairwoman Barbara Mikulski (D-MD) told CQ Roll Call that it was her intention to finish the “cromnibus” at the committee level by December 5 and leave remaining decisions to leadership. It is at the leadership level that conservatives in Congress will plead for riders that bar the president’s immigration actions. The major question is whether House GOP opponents of the president’s actions will number 12 or 50. If the latter, John Boehner (D-OH), House Majority Leader, will need the assistance of Minority Leader, Nancy Pelosi (D-CA) to deliver Democratic votes to move the measure. Under this scenario, a major question becomes “What is the quid pro quo?” and could place Democrats in a position to force changes in important areas. Pelosi’s Democrats may decide the bill’s fate if the conservative number is large enough to preclude Republicans from rallying sufficient votes.

Despite the Democrats’ openness to compromise on this issue, Representative Chris Van Hollen (D-MD), in his leadership position in the party, said, “Obviously, we think the best way to do this is to have an omnibus for the full year for all government agencies, but we’re going to look at the fine print and make a decision.” Freezing Homeland Security’s funding is bad policy, but better than some of the alternatives heard immediately after the president’s actions on immigration, and far better than short-term CRs for all agencies that House leaders have as a back-up plan.

Republicans are continuing to cobble together the specifics of the package as this article is being written. From everything we can tell, the Democrats are maintaining a wait-and-see approach. Most importantly, the administration has signaled that Obama is willing to accept the package, albeit, somewhat reluctantly, since 12 full spending bills is the first choice, but there is not yet a veto threat.

Senate Majority Leader Harry Reid (D-NV), despite his concerns about the Homeland Security provision, is supporting the GOP effort, which seems to be following the Mikulski/Rogers strategy. He, as well as several other Democrats in both houses, feel that Mikulski’s involvement in the “cromnibus” negotiations gives the Democrats leverage they won’t have next year.

Yet the Democrats’ wait-and-see approach is based on the fact that the package is not yet finalized. There could still be a full-fledged political fight over policy riders targeting the EPA’s recent regulations on greenhouse gas emissions from power plants or those targeting labor issues resulting from National Labor Relations Board (NLRB) decisions or financial regulations of the Consumer Protection Financial Bureau or nutrition requirements of the School Lunch Program. These are but a few of the dozens of policy riders that have stalled floor action on spending bills earlier this year.

We, at NETWORK, are committed to serving the common good by urging Congress to fund adequately critical human needs, social service and environmental protection and that includes the annual appropriations bills reviewed in the foregoing section.


In the first section dealing with tax breaks, we know that congressional members have punted to the next Congress the major issues that could promote the common good. The 114th Congress in 2015 must create a more equitable and secure society by expanding tax credits to those living in or near poverty rather than focusing on expensive tax breaks for those already economically secure. Only then will we be able to raise reasonable revenue and begin to deal with our budget needs. If either house of Congress plans to protect only corporate interests in shaping tax policy next year and neglects individuals and families living in or near poverty, NETWORK, together with our many friends in the faith-based community and other non-profits, will immediately spring into action to help create an equitable tax system based on fairness and justice.

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