Deja vu all over again

Forty years ago, congressional big-spenders were upset to learn that a few hundred American millionaires were paying little or no income tax.

Their "offense" was merely to claim all the deductions Congress in its wisdom had enacted into law, resulting in little or no tax liability.

So Congress enacted the Alternative Minimum Tax -- a way to make high wage-earners pay more income tax than otherwise required under Congress' own tax code, sort of like requiring cops to give rich people speeding tickets for going 54 in a 60 mph zone, or requiring supermarkets to charge rich people $1.29 for a can of beans clearly priced at 79 cents.

Everyone was happy -- except the millionaires. And who cares about them? It's not as though millionaires work hard or do any good by creating jobs or performing brain surgery or anything.

But Congress forgot to index the AMT to government-created inflation. That means, thanks to "bracket creep," each year more filers make the painful discovery that they've claimed "too many" otherwise proper deductions -- higher state and local taxes, higher interest payments on the mortgage, a few too many charitable donations -- and that they must therefore calculate their punishment on a different set of worksheets. (The AMT always brings a higher tax payment than a standard, itemized return.)

So congressional Democrats play an annual game of brinkmanship before reluctantly enacting an annual AMT "patch."

Each year, more than 20 million additional households -- particularly in high-tax Democratic states such as New York, New Jersey and Michigan -- are threatened with an extra $2,700 in federal income taxes unless a new "patch" is enacted. It should be a no-brainer for the Democratic leadership to fast-track legislation that spares these constituents from a tax that wasn't intended to target them in the first place.

"Unless we act," Sen. Max Baucus, a Montana Democrat, warned last December -- visions not of sugerplums but of 25 million outraged taxpayers dancing in his head -- "it will destroy the entire tax system."

But each year, congressional Democrats whine that they've already spent the $50 billion to $60 billion the AMT would raise without another "patch" -- that if Republicans want to hold it off again they must agree to "pay for" this $60 billion "tax cut" by agreeing to higher taxes on hedge fund managers, big corporations, merchants who accept credit cards -- anyone else cast as a "greedy bad guy" in this ritualized Democratic melodrama.

On Wednesday, the House Ways and Means Committee voted 22-16 for legislation again rescuing more than 20 million largely upper-middle-class families from shelling out thousands of dollars for the AMT next year. But in a repeat of last year, Democrats insisted that the estimated $61.5 billion "cost" of the relief must be made up by bringing in new revenue, mainly from corporations.

Democrats knew they had no legitimate claim to that $61 billion -- that it would be political suicide to try to collect it. But they spent it anyway. Now they insist that someone else help them cover their bad check.

In last year's running of this game, after months of wrangling, House Democrats caved. On the last day of the session they passed another AMT patch without the tax hikes they'd insisted were needed to "pay for" it -- though the late vote did delay IRS refund checks for millions of taxpayers.

There's no reason to believe this year's Democrats are any more anxious to provoke a tax revolt in Michigan, New York and New Jersey in a tight presidential election year.

Of course, there should be no new tax hikes to "pay for" the "loss" of $60 billion in revenue that has never existed anywhere but in Cloud-Cuckoo land. But Republicans should go further than that. The best solution has been introduced by Sen. John Ensign, R-Nev. His bill would abolish the AMT once and for all, as well as make permanent the cuts on capital gains, dividends and income taxes that are scheduled to expire in 2011 -- tax cuts that have led to years of economic growth and record federal revenue collections.

Republicans should have passed this legislation when they were in the majority. They should now vow to enact it within 30 days, should voters choose to put GOP Sen. John McCain in the White House and return congressional control to Republicans.

In addition, they should promise more oil wells and refineries to hold down fuel prices and permanent tax cuts to relieve Americans' pocketbooks and get economic investment and prosperity going again.

Against this, Democrats promise gasoline too expensive to drive; electricity and fuel oil too expensive to cool or heat our homes; a lower standard of living and higher taxes to help "share the suffering" -- pretty much as they did in 1980, 1984, 1988, 2000 and 2004.

And then accuse Republicans of pursuing the "failed policies of yesteryear."