This vote was on an amendment by Charles Grassley, R-Iowa, that would adjust the budget resolution for fiscal 2009 to allow amendments related to the Alternative Minimum Tax (AMT) to be exempted from rules barring deficit spending (known as “PAYGO”).
The budget resolution sets overall spending targets for the Appropriations committees and outlines other budget rules. When Congress violates these rules – such as allocating more money for a program than what it had set out in the budget resolution – the measure can be defeated on a procedural motion. One of these rules allows legislation to be defeated with a procedural motion if it violates the PAYGO rules. This amendment would exempt from PAYGO any legislation dealing with the AMT.
Devised in 1969, the AMT was intended as a way to capture more tax revenues from a handful of very wealthy people so adept at using loopholes that they paid little into the federal treasury. But the program has come under scrutiny in recent years, because an increasing number of middle-class taxpayers have found themselves subject to the tax. This is largely because the AMT’s formulas do not account for inflation or recent tax cuts.
Grassley said his amendment guarantees that the AMT will be dealt with.
“This amendment gives us an opportunity to get over that hurdle that is in this budget resolution that, under pay-go, you would have to have an offset for the AMT. So even though the resolution sets aside money to deal with this year’s patch, unless my amendment is adopted, there is no guarantee the patch will be done. The 25 million families who will be hit by the AMT increase will get a tax increase of over $2,000 apiece. So they deserve a guarantee of relief,” Grassley said.
Most everyone agrees that the AMT is affecting too many people unfairly and needs to be changed. But the AMT brings in a considerable amount of tax revenues that Congress spends from year to year and deciding how to make up that lost revenue is a perennial sticking point when it comes to making any changes to the AMT’s formulas.
Kent Conrad, D-N.D., said the amendment would “blow a hole in the budget as big as all outdoors.”
“[It’s] a trillion dollars not paid for, a trillion dollars that we are going to go out and borrow from the Chinese and Japanese. That makes absolutely no sense,” Conrad said.
By a vote of 47-51, the amendment was rejected. All but one Democrat present voted against the amendment (Evan Bayh of Indiana). All but two Republicans present voted against the amendment (Olympia Snowe of Maine and George Voinovich of Ohio). Thus, the bill went forward without language that would have exempted AMT legislation from rules prohibiting spending that increases the deficit.