Towards the end of last week, Blanche Lincoln and Jon Kyl got a lot of attention for their proposal to lower the estate tax and save the wealthiest 0.28 percent of estate owners about $440 billion over 10 years. Think Progress and others angrily noted the amendment's victory. "The Senate narrowly passed the bill by a 51-48 vote," sighed Satyam Khanna.Well, sort of. The Senate narrowly passed something called the "Deficit Neutral Reserve Fund for Estate Tax Relief." This did not reform the estate tax. Rather, it reserved the right to reform the estate tax at some later date. It's a budget gimmick, not a bill.Reserve funds are odd birds. At the beginning of each year Congress passes a budget. The budget funds the various committees. A proposal that raises spending or cuts taxes outside the limits defined by the budget can be killed by a Senate point of order. A reserve fund basically reserves your right to lift your spending ceiling or lower your revenue floor for a certain purpose. A deficit-neutral reserve fund reserves your right to lift spending or lower your revenue floor in a way that doesn't harm the deficit.That's what Kyl and Lincoln passed. If they can find hundreds of billions to fund a cut in the estate tax, they can then hold a vote to cut the estate tax. If they can't, they can't. More interesting, they have essentially admitted that they will need to fund it through cuts to entitlements. As Jim Horney, a budget expert at the Center for Budget and Policy Priorities, explained to me, "if you pay for a tax cut with another tax increase you haven't reduced revenues in net and you don't need a deficit-neutral reserve fund." To pass the estate tax reform, in other words, they'd have to cut hundreds of billions in spending from currently existing programs. Unless they're planning to chop apart the Pentagon, that means cutting entitlements. That means this isn't happening. This was, in other words, a cost-free vote. Deficit-neutral reserve funds also serve a non-budgetary purpose: They allow you to insert a priority in the budget without actually passing or paying for it. Blanche Lincoln can now go to her constituents and explain that she built estate tax relief into the budget. That's true even as no one actually experiences any estate tax relief and the Senate does nothing to actually fund the policy. This proposal, in other words, was evidence that Blanche Lincoln, Jon Kyl, and 49 of their colleagues thought it extremely important to be on record supporting a $440 billion tax cut for the wealthy, not that they're actually going to pass the tax cut. THERE IS NO ESTATE TAX REFORM.
Towards the end of last week, Blanche Lincoln and Jon Kyl got a lot of attention for their proposal to lower the estate tax and save the wealthiest 0.28 percent of estate owners about $440 billion over 10 years. Think Progress and others angrily noted the amendment's victory. "The Senate narrowly passed the bill by a 51-48 vote," sighed Satyam Khanna.Well, sort of. The Senate narrowly passed something called the "Deficit Neutral Reserve Fund for Estate Tax Relief." This did not reform the estate tax. Rather, it reserved the right to reform the estate tax at some later date. It's a budget gimmick, not a bill.Reserve funds are odd birds. At the beginning of each year Congress passes a budget. The budget funds the various committees. A proposal that raises spending or cuts taxes outside the limits defined by the budget can be killed by a Senate point of order. A reserve fund basically reserves your right to lift your spending ceiling or lower your revenue floor for a certain purpose. A deficit-neutral reserve fund reserves your right to lift spending or lower your revenue floor in a way that doesn't harm the deficit.That's what Kyl and Lincoln passed. If they can find hundreds of billions to fund a cut in the estate tax, they can then hold a vote to cut the estate tax. If they can't, they can't. More interesting, they have essentially admitted that they will need to fund it through cuts to entitlements. As Jim Horney, a budget expert at the Center for Budget and Policy Priorities, explained to me, "if you pay for a tax cut with another tax increase you haven't reduced revenues in net and you don't need a deficit-neutral reserve fund." To pass the estate tax reform, in other words, they'd have to cut hundreds of billions in spending from currently existing programs. Unless they're planning to chop apart the Pentagon, that means cutting entitlements. That means this isn't happening. This was, in other words, a cost-free vote. Deficit-neutral reserve funds also serve a non-budgetary purpose: They allow you to insert a priority in the budget without actually passing or paying for it. Blanche Lincoln can now go to her constituents and explain that she built estate tax relief into the budget. That's true even as no one actually experiences any estate tax relief and the Senate does nothing to actually fund the policy. This proposal, in other words, was evidence that Blanche Lincoln, Jon Kyl, and 49 of their colleagues thought it extremely important to be on record supporting a $440 billion tax cut for the wealthy, not that they're actually going to pass the tax cut. 
