Projo Politics Blog

WASHINGTON -- When scholars dig into the remains of the Great Market Rescue of 2008, assuming that Congress accepts it this week and American capitalism survives the treatment,- they may puzzle over a curious aspect.

The lead author listed on the bill was not the chairman of a major financial committee, nor the treasury secretary, nor the president. It was one Patrick J. Kennedy, Democratic representative from the First Congressional District of Rhode Island.

Historians would also find that the huge financial rescue bill contained an unrelated provision that marked a personal victory for Kennedy, his initiative to improve the care of the mentally ill.

To be sure, Kennedy's sponsorship of the Emergency Economic Stabilization Act of 2008 is misleading. Kennedy has not been among the negotiators of the $700-billion rescue package that the Senate is to consider late tonight.

Nevertheless, it is Kennedy's name that appears at the top of the 451-page financial rescue bill, H.R. 1424. You could look it up here, and therein lies a tangled parliamentary tale.

To start at the beginning, the framers of U.S. Constitution (Article 7, Section 1) says tax bills must originate in the House of Representatives. The idea was that taxes should be proposed by the only federal officials directly accountable to the people. In those days, senators were chosen by their state legislators; only House members stood for direct election by the people.

Meanwhile, two unrelated threads have found their way into the fabric of the big financial drama. First was Kennedy's campaign to secure insurance coverage of mental illness on a par with that of physical illness. After long effort, `"mental health parity'' won overwhelming support on both sides of the Capitol. A milestone was House passage of a parity bill (H.R. 1424, in fact) on a vote of 268 to 148 last March 9. The House and Senate soon reconciled their differing bills in every respect but one: how to pay the estimated cost of several billion dollars. The "pay-for'' dispute was resolved last summer when the parity bill was folded into a large package of tax measures that was viewed as must legislation.

That gets to the second subplot of the story, the "tax-extenders'' bill that extends the life of tax measures scheduled to expire. The big prize in the grab-bag was a change in the alternative minimum tax, a revenue-raiser intended to make sure that the well-to-do paid their share despite tax shelters. The AMT has become one of the tax code's most hated provisions over the years as its formula sent it ever-deeper into the middle class -- or at least millions of families who do not consider themselves rich. If there is no fix before Congress adjourns this year, another 23 million will feel the bite of the tax next year.

The AMT's unpopularity might have ensured easy passage of the overall tax-extenders package -- until the rival House and Senate approaches to budgeting for its lost revenue proved even more powerful. That struggle has raged unresolved, each house refusing to take the other's particular budget mechanism, until last night, when Senate leaders announced plans to attach the tax extenders (including Kennedy's mental health bill) to their version of the financial rescue.

That gets us back where we started, with the constitutional ban on Senate origination of tax bills. Once the Senate decided to add the tax-extenders to it, the rescue bill qualified as a tax bill. In order to get around the Constitution, the leaders turned to the time-honored stratagem of finding a live but dormant House bill -- Kennedy's H.R. 1424 -- to use as a shell.

 Tags  alternative minimum tax financial bailout bill mental health parity Patrick Kennedy

Comments

Where there's a bill, there's a way said:

Go, Kennedy, go. Far, far, away.

Taxation without representation was the basis for the Boston Tea Party, and the Dynamic Duo can hardly be considered representatives of this state when they ignore the fact that the majority of their constituents are opposed to this bailout scheme.

(BTW, don't you mean Article 1 Section 7?)

http://www.law.cornell.edu/constitution/constitution.articlei.html

Link | October 2, 2008 9:20 AM
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