TWIW: Online Sales Tax and Debt Ceiling Revisited

This contribution is part of our weekly This Week in Washington series.

After voting for the largest income tax increase in American history earlier this year, the Senate is slated to pass the largest defacto sales tax increase this week. Meanwhile Republicans in the House will continue to flounder around trying to find a strategy for the upcoming debt ceiling fight.  Concurrently, the fight over the future of our country will reach a new level as the amnesty bill begins to wind its way through the Senate committees. 

Online Sales Tax: After a number of Republicans voted to invoke cloture on the online sales tax bill (S.743), this bill is expected to pass with a simple majority vote on Monday.  To make matters worse, supporters of the bill are offering a manager’s amendment which will provide a new definition for “state” that allows every tribal organization to force businesses in every state to pay sales tax too. There are 565 federally- recognized tribal organizations. This means that every business will now have to add 565 tribal tax systems to their system when collecting sales taxes for online purchases.

Conservatives must work to quickly circulate a letter in the House invoking the Hastert Rule against this massive tax increase. We must make it clear that this tax increase is opposed by the majority of the House Republican Conference, and should not be brought to the floor any time during this session. 

Debt Ceiling - In January, Congress voted to suspend the debt ceiling ($16.394 trillion, at the time) until May 18.  However, given that the Treasury has the ability to shift payments and employ “extraordinary measures,” that defacto debt ceiling will not be reached until the end of the summer or early fall.  Meanwhile the gross debt stands at roughly $16.8 trillion.  In preparation for the fight over raising the debt ceiling yet again, GOP leaders have finally acceded to conservative demands to pass the Full Faith and Credit Act, H.R. 807.  This bill will force the Treasury to prioritize payments for interest on the debt and social security in the event that the debt ceiling is reached.  The bill will come to the floor on Wednesday.    

Conservatives have long advocated that we take default off the table so we can fight for transformational change while refusing to raise the debt ceiling without concessions from the Democrats.  There is more than enough revenue coming in to the Treasury to pay the vital bills.

Conservative concerns:

• A shell game: Leadership is not bringing this bill to the floor because they have undergone a cathartic change and are suddenly willing to fight the debt limit increase.  This is just a bone being thrown to conservatives in return for their agreement to vote for the January debt limit suspension and the CR that funded Obamacare in March. 
•   Defacto Debt Increase:  Unlike the original version of the Full Faith and Credit Act sponsored by Rep. Tom McClintcok (R-CA), this iteration was dramatically altered by the Ways and Means Committee.  The original bill would have prohibited any new issuance of debt, forcing the Treasury to use only the incoming tax revenue (which covers about 65% of outlays) to prioritize interest payments.  This version would allow the Treasury to issue more debt in order to cover interest payments and Social Security interest expenditures.  This means that the tax revenue can be used to pay for almost all other functions of government, while using new debt to pay for the priorities.  This is a defacto debt limit increase. 

Immigration – Just two weeks after releasing the 844-page amnesty bill (S.744), which was written behind closed doors, the Senate Judiciary Committee will begin a marathon markup of the bill this Thursday.  The Senate Homeland Security Committee will also hold a hearing on the border security aspects (or lack thereof) of the bill. In addition to forcing this super-complex legislation down the throats of Republican members so quickly, the drafters of the bill plan to introduce a 350-page managers’ amendment.  Taken as a whole, Republican members on the committee, most of whom were shut out of the entire process, are flummoxed and struggling to understand the ramification of this bill, let alone any new amendments.  For a detailed critique of how this bill will break our immigration system for years to come, please read this analysis over at the Madison Project.

Meanwhile, conservatives are now getting a handle on how many immigrants would be brought in under this bill.  According to Senator Sessions, this bill would bring in 32.7 million immigrants over the next 10 years, not including the 25 million new guest workers.  This is on top of our current record levels of between 1 and 1.1 million new green cards annually.  The bill will essentially bring in 2 million new immigrants every year. Also, the Heritage Foundation is publishing a study that will peg the price tag for amnesty at $6.3 trillion, when all the welfare costs associated with such a low-skilled population are factored in.  

Outlook 

After spending two weeks denying the flaws in the bill as laid out by conservatives, Marco Rubio is finally admitting that the bill should be changed.  However, here’s how I see this playing out.  Republicans will offer some good amendments –both in committee and on the floor – to strengthen the border triggers and limit the amnesties.  Undoubtedly, Senator Rubio and most of the Republicans (and even some Democrats) will support those amendments, knowing that they will be voted down.  Then, after feigning concern for our security with their show votes, these senators will ultimately vote for the final bill.

Ultimately, it’s hard to see how this bill, no matter how odious the final product, will fail to get 60 votes on the floor.  Almost every Democrat will vote for it along with the GOP gang members.  There is very little margin for error.  

The real fight will commence in the House.  There is a parallel gang of 8 in the House that is working on a very similar bill.  They will add in one or two shiny objects to attract more Republican votes, but from what I’ve seen of the rough draft, this bill will be very similar to the Schumer/Rubio amnesty.  Conservatives must work closely with the good members on the Judiciary and Homeland Security committees in an effort to block any mass amnesty bill, while focusing on national security, enforcement, and targeted legal immigration reforms.

Ancillary issues this week

- Here is a list of some of the smaller issues that will be considered in the House under suspension, along with the daily schedule for both the House and the Senate.

Stay informed every day at www.MadisonProject.com

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