Pending vote has Walz uneasy

12/19/2007

Easing AMT will mean adding to deficit



By Mark Fischenich
Mankato Free Press Staff Writer
December 19, 2007


It’s looking increasingly likely Congressman Tim Walz is going to have to decide between budget discipline and 40,000 of his constituents sometime later this week, and the freshman Democrat said Tuesday he’s struggling with the decision.

Senate Republicans, backed by President Bush, are blocking efforts by Walz and other House Democrats to generate $50 billion of new revenue to offset $50 billion in tax relief for people who are otherwise going to get hit by the Alternative Minimum Tax next year. The Senate on Tuesday effectively voted to allow the cost to be added to the national debt.

After winning control of Congress a year ago, Democrats imposed “pay as you go” rules, known as pay-go for short, that attempt to force the fiscal discipline required to keep budget deficits and the national debt from growing. The rules require spending increases and tax cuts in one area to be offset by spending cuts or tax hikes in other parts of the budget. The Senate proposal would be a clear violation of the rules.

“I’m talking to a lot of people and struggling with this,” Walz said Tuesday, referring to extensive discussion with his congressional staff and opinion leaders in southern Minnesota.

Walz said the politically expedient choice would be to support the Senate bill, whcih was expected to be voted on today in the House.

“The easy thing is to go that way,” Walz said.

An estimated 40,000 1st District residents, and millions more nationwide, will avoid a sharp income tax increase next year if the AMT fix is passed. That tax, created nearly 40 years ago to keep the very richest Americans from using accounting strategies to avoid paying any taxes, has never been adjusted for inflation and is now impacting upper-middle-class and middle-class taxpayers.

There could be political fall-out, however, if Walz votes to violate the pay-go rules. During last year’s successful campaign to knock off longtime GOP Congressman Gil Gutknecht, Walz was critical of the budgets and massive deficits piled up by the then-Republican-controlled federal government.

And he was vocal in his enthusiasm for pay-go.

The Democratic-controlled House passed an AMT fix earlier this month that offsets the tax relief with $50 billion in new taxes, mainly by shutting down loopholes on offshore tax havens. Republicans in Congress and the White House balked at that idea, setting up the vote on an AMT fix that simply allows the deficit to grow.

“I’m as disappointed as I’ve been with the Senate,” Walz said. “And that’s saying something.”

Walz said it’s tempting to look out for his constituents who are in line to be hit by the AMT, which would boost taxes by an average of $2,000 per person for the 21 million who would be impacted nationwide. At the same time, he brings up his 1-year-old son in arguing against pushing the cost on to the debt.

“Should we pay for this or should Gus and his generation?” Walz said.