The Origination Clause and the Fiscal Cliff (updated)

Since the discussion of the issue has been rather muted, it may be worth flagging the potential impact of the Origination Clause, art. I, sect. 7, cl. 1, on how the so-called “fiscal cliff” is resolved. The Origination Clause provides that “[a]ll Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”

Let’s begin with efforts to get the House to pass a Senate bill, S. 3412, the “Middle Class Tax Cut Act,” to extend current tax rates on all income brackets except the top two. The bill in question originated in the Senate (as reflected by the Senate bill number) and so would seem to violate the Origination Clause if it is a bill “for raising Revenue.

One might ask whether S. 3412 is a bill “for raising Revenue” given that it does not increase taxes, but merely keeps certain tax rates (which would otherwise automatically increase in 2013) at current levels. However, it appears fairly well-established, at least as a matter of congressional precedent, that the Clause covers all bills relating to raising revenues, not merely those that increase current revenues. The House has long taken the position that it has “sole and exclusive privilege to originate all bills directly affecting the revenue, whether such bills be for the imposition, reduction or repeal of taxes.” 2 Hinds Precedents § 1489 (resolution of 1872). There is some judicial authority in support of this proposition as well. See Armstrong v. United States, 759 F.2d 1378, 1381 (9th Cir. 1985) (“The term ‘Bills for raising Revenue’ does not refer only to laws increasing taxes, but instead refers in general to all laws relating to taxes.”) (emphasis in original).

House Democrats have sought to force a House vote on S. 3412 through the use of a discharge petition. However, Speaker Boehner observed the other day that any attempt to vote on S. 3412 would face a “blue-slip problem” in the House.  As McKay and Johnson explain (Parliament and Congress 241-42), this is a reference to the procedure the House uses to enforce its prerogatives under the Origination Clause:

The prerogative must be raised and resolved as a question of privilege in the House by disposition of a resolution generally asserting the prerogative without specifying the offending provision and purporting to return the entire Senate bill or amendment to the Senate as an infringement. Debate on the resolution then details the offending matter. ‘Blue-slipping’ is the term applied to the process by which the House returns an offending measure to the Senate, as the resolution if adopted is printed on blue paper. Any Member may offer such a resolution, but it normally is presented by the Chairman of the Committee on Ways and Means as the institutional guardian of the House’s revenue-raising prerogative. Traditionally the House on a bipartisan basis supports the position taken by the Chairman of Ways and Means despite the political acceptability of the measure containing the offending provision.

While S. 3412 appears to violate the Origination Clause, the Senate is not constitutionally barred from taking the initiative now on a revenue bill. This is because the Senate is permitted to propose amendments to revenue bills that have originated in the House. While there are some gray areas with respect to the scope of that authority, there would not seem to be any question of the Senate’s right to take a House bill such as H.R. 8, the “Job Protection and Recession Prevention Act of 2012,” which passed the House on August 1, 2012, and propose the language of S. 3412 as an amendment. (H.R. 8 would extend all of the current tax rates).

Of course, the Senate’s authority in this regard only lasts until January 3, 2013, when the current Congress ends. At that point all legislation introduced in the 112th Congress will expire, and the Senate will have to wait on a new House bill before it can (constitutionally) move revenue legislation.

For more background on the Origination Clause, see this CRS report.


Fiscal Cliff Update (1-1-13): 

The Senate’s action yesterday was to pass H.R. 8 (“American Taxpayer Relief Act of 2012”), as amended. So there is no Origination Clause violation, as far as I can see.

And the House has about 45 hours to act.





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