You know those editorial cartoons that always appear the week after Christmas? The ones that depict the old, bearded man with an hourglass leaving the scene, replaced by the cheerful, diaper-clad baby wearing a sash that proclaims the upcoming year?

This year that baby could be replaced by the cowled, scythe-bearing depiction of death — unless Congress acts to prevent the return of the estate tax. If the lame-duck session of Congress fails to act, the estate tax will jump from its current 0 percent back to the top rate of 55 percent with just a $1 million exemption.

While the National Association of Manufacturers and many other business and farm groups have long advocated the permanent end of the estate tax, a reasonable, attainable compromise has been proposed by Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ). Their plan would exempt the first $5 million in an estate’s wealth from taxation and set the top rate at 35 percent.

From Dow-Jones, “Business Groups Back Quick Compromise On Estate Tax“:

Rather than try to use the lame-duck period to set long-term policy, Congress should find a quick compromise to stave off the punitive rates under current law, some business groups argue.

“The last thing we want to do is have any major tax policy determined in the course of a week in a lame-duck cycle following a significant electoral shift,” said Dena Battle, director of tax policy at the National Association of Manufacturers.

Battle said in the long haul, the group will continue to press for ” significant reform,” along the lines of the Lincoln-Kyl proposal.

We’ll defer to the unnamed White House official and his keen analysis of Tuesday’s Democratic primary runoff election in Arkansas between Sen. Blanche Lincoln and labor-backed Lt. Gov. Bill Halter. Lincoln defeated Halter, 52-48 percent. From Ben Smith, Politico:

“Organized labor just flushed $10 million of their members’ money down the toilet on a pointless exercise,” the official said. “If even half that total had been well-targeted and applied in key House races across this country, that could have made a real difference in November.”

Pointless? No, not really. By devoting organizing muscle and pouring $10 million into Halter’s failed effort, the unions proved the point that labor leaders consider their own political power more important than their memberships’ concerns. And their political power is more pissant than puissant.

The anti-democratic Employee Free Choice Act was a big factor in Tuesday’s primary in Arkansas. Labor turned decisively in April 2009 against Sen. Lincoln when, after months of ambiguity, she said she would vote against the Employee Free Choice Act.  Arkansas is a right-to-work state, and depriving employees of the secret ballot in union-representation elections and forcing contract terms onto employers — the heart of the Employee Free Choice Act — is anathema to voters.

Even Halter recognized that card check was bad electoral news. He hemmed and hawed on his backing for the measure, stuck between his need for union cash and voter support.

Lessons learned:

The Employee Free Choice Act is an election loser, which means it will not pass in the second session of the 111th Congress as stand-alone bill. So labor will look to add pieces of EFCA to other legislation, probably adding the word “jobs” to the measure.

The National Labor Relations Board is where the action is. Big Labor maligned Lincoln for opposing cloture on the nomination of SEIU and AFL-CIO counsel Craig Becker to the NLRB. It was a good vote. A recess appointment, Becker is already showing the signs of the pro-labor activism his critics warned of. It may come after the election — certainly after the last Republican appointee, Peter Schaumber steps down in August — but expect NLRB rule-making designed to achieve some of labor’s goals.

Big Labor can promise a candidate support, even deliver on that support, and yet not determine the elections. Voters dislike the bluster and threats of political force — in campaigns, and in the workplace.

Sen. Arlen Specter, as (R-PA) was an original cosponsor of the Employee Free Choice Act when Sen. Kennedy introduced the bill (S. 842) in 2005. He subsequently moved away from the bill, but then in this election cycle as Democrat re-associated himself with organized labor’s No. 1 priority. Who can forget the Senator’s comments at the AFL-CIO convention in Pittsburgh last September, when he proclaimed:

We have pounded out an Employees Choice bill which will meet labor’s objectives. I believe before the year is out, and I will join my colleague Senator Casey in predicting, that there will be passage of an Employees Free Choice Act which will be totally satisfactory to labor.

Speaking at the AFL-CIO gathering, President Obama opened his comments with a salute to Specter for being willing to “fight for the working men and women,” which, given the context, we took to mean union members.

Despite the support of organized labor, Democratic voters said no thanks on Tuesday, nominating Rep. Joe Sestak over Specter for the Senate seat. Big Labor’s two priorities in Pennsylvania in 2010: Arlen Specter’s re-election and the Employee Free Choice Act. Hasn’t worked out, has it?

In Arkansas, the left-wing challenger and labor’s annointed candidate against Sen. Blanche Lincoln failed to unseat her in the Democratic primary. The unions were incensed at Lincoln for her criticisms of the Employee Free Choice Act, and they promised money and support to Lt. Gov. Bill Halter to mount a primary challenge. As The Washington Post reports, “In Arkansas, dissatisfied labor unions worked hard against Lincoln.” Excerpt:

SEIU, which has only 1,000 members in the state, spent more than $1.5 million, including a $1 million television buy, Youngdahl said. The national AFL-CIO spent $3 million or more on Halter’s behalf, spokesman Eddie Vale said.

All that money, all those organizers working the precincts, all that fervor for the Employee Free Choice Act, and the best labor could do was force a run-off election in June. And that’s thanks to D.C. Morrison, a third candidate who, running as a conservative businessman who opposed the Employee Free Choice Act, gained 13 percent of the vote. With Lincoln’s 44 percent of the vote, that’s a 57-percent anti-EFCA vote in the Democratic primary.

The Employee Free Choice Act and labor’s political efforts figured prominently in both races (more in Arkansas), so voters were informed about the issue. The result: The Employee Free Choice Act, rejected by the voters.

Senate Majority Leader Harry Reid (D-NV) filed two cloture motions on Monday to bring to a close debate on S. 3217, the financial regulation bill, and the Dodd substitute bill, which will embrace all the changes made to the bill. The move means cloture votes on Wednesday.

Why now? So Senators can see what happens in tonight’s Democratic primaries in Pennsylvania and Arkansas. Two Senators with pending amendments will learn their political fates: Sen. Arlen Specter (D-PA) is supporting an amendment to overturn the U.S. Supreme Court’s ruling in Stoneridge v. Scientific Atlanta, inviting more securities lawsuits; Sen. Blanche Lincoln (D-AR) has pushed language to regulate derivatives.

In other speculation: Democrats may filibuster? Suppose it’s possible, maybe, probably not. Ezra Klein summarizes the issue:

Senate Democrats are threatening to filibuster financial reform unless their demands are met, report Meredith Shiner and Carrie Budoff Brown: “Sen. Byron Dorgan (D-N.D.) has said he will filibuster the bill unless the Senate votes on his amendment banning a speculative financial instrument known as a ‘naked’ credit default swap. Sen. Maria Cantwell (D-Wash.) has done the same, saying she needs a vote on her amendment separating commercial and investment banking operations.” Majority Whip Dick Durbin says he’s confident all Democrats will get on board.

And you know, it’s not as if the fait is accompli. Michael Grunwald at Time comments, “Financial Reform Inevitable? Don’t Bank on It.”

P.S. Ezra Klein’s Wonkbook news roundup at voices.WashingtonPost.com is nicely done. A new daily read.

Marketwatch, “Senate committee approves controversial derivatives bill“:

WASHINGTON (MarketWatch) — Big commercial banks would be forced to shed lucrative derivatives trading operations under provisions of controversial, sweeping legislation to regulate the $450 trillion derivatives market that was approved Wednesday by the Senate Agriculture Committee.

The vote was 13-8 with all Republicans opposed except for Sen. Charles Grassley, R-Iowa. The committee has 12 Democrats and nine Republicans.

The bill establishes a clearinghouse and collateral requirements for trading in derivatives, and has important exemptions for many businesses, such as manufacturers, airlines, and other commercial “end users.” Marketwatch quotes Dorothy Coleman, the NAM’s top tax policy person: “We are encouraged that the bill approved this morning by the Senate Agriculture Committee recognizes the importance of these risk management tools to end-users like manufacturers.”

Marketplace also talked to the NAM in this story, “Some industries cheer derivatives vote.”

Committee Chairman Blanche Lincoln’s news release, “Bipartisan Bill Passage will Pave Way to Ending Backroom Wall Street Deals.”

UPDATE (8 a.m.): Wall Street Journal’s piece is good, “Grassley Bucks GOP, Backs Derivatives Curb.” There is, of course, much, much more in the financial reg legislation than just derivatives regulation. The consumer finance protection agency could have huge implications.

Bloomberg reports on business groups lobbying for a 35 percent death tax to prevent a return to the 55 percent tax rate at the end of the year. Business has long argued for eliminating the death tax altogether, but current political and budgetary realities make that an unrealistic goal at the moment.

A 35 percent rate “is really that sort of sweet spot of what’s acceptable to all sides,” said Dena Battle, director of tax policy for Washington-based National Association of Manufacturers. “We don’t want to see the tax go up to 55. We didn’t want to see the tax at 45.”

The longer Congress delays action, bringing a 55 percent tax closer to reality, the fewer reasons Democrats have to consider Kyl’s and Lincoln’s 35 percent alternative, said Jeff Shoaf, senior executive director for government affairs at Arlington, Virginia-based Associated General Contractors.

In a December 2009 column, Sen. Jon Kyl (R-AZ) explained the reasoning behind the language he and Sen. Blanche Lincoln (D-AR) have sponsored:

I have always believed that permanent repeal of the death tax represents the best policy, since it frees capital in the private market for more productive uses than fueling the federal government’s spending binge. However, even in the best of times, we have only been able to win 56 votes in the Senate for repeal, just shy of the needed 60. With the current makeup of Congress, permanent repeal is simply not in reach.

With that in mind, Democratic Senator Blanche Lincoln and I offered an amendment to the Senate budget resolution in 2009 that attempted to strike the best compromise. It would have permanently established a 35 percent death tax rate with a $5 million exemption amount indexed to inflation. That amendment passed by a vote of 51 to 48 with the support of 11 Democrats and every Republican senator. But, unfortunately, the congressional budget resolution is only an advisory measure.

From The Orlando Sentinel, “Dems come out against card check“:

There is a growing roster of Democrats coming out against the White House-backed card check legislation, and now Orlando has its own political A-listers following suit.

Roger Chapin and Joe Kefauver recently formed an advocacy group called Floridians for Responsible Policy (Floridiansforresponsiblepolicy.com), which will take on the bill that pits business against labor as item No. 1 on its agenda.

Chapin and Kefauver, both longtime Democrats who voted for Barack Obama for president and contributed to Democratic candidates, say the Employee Free Choice Act is bad for a lot of reasons, but first and foremost it represents an “over-reaching” by their party.

“I agree with the right to unionize,” said Chapin, an executive at Mears Transportation, which contended with an attempt to organize last year. “But this tilts the playing field too far.”

Expect scorn and retaliation, gentlemen.

From Talking Points Memo, “Will Unions Back A Green Candidate Against Blanche Lincoln?”

Michael Kinsley, “Democrats for Rich Heirs?“:

Oh, small business blah blah blah. For the umpteenth time: Big businesses (such as General Motors) are mostly owned by people of small means (workers through their pension funds, 401(k)s and so on). To be affected by the estate tax, a business must be owned by someone of large means: at least $7 million. Small businesses come and go. Yes, they create jobs disproportionately. They also eliminate jobs disproportionately. There’s nothing wrong with small businesses, but there is no reason of fairness or efficiency that they deserve special treatment.

Oh, Michael Kinsley blah blah blah.

That not being an adequate retort, we’ll instead cite Sen. Blanche Lincoln (D-AR), sponsor of the Senate amendment to reduce the death tax. From her floor statement, April 2:

Because my time is limited, I wish to take a moment to read to you a few excerpts from an editorial that appeared in the Arkansas Democrat-Gazette earlier this year. It was submitted by a member of a family who runs a timber operation in southwest Arkansas and that has been in the family since 1907. He said:

The estate tax kills jobs. It kills companies that provide jobs. In the process it kills towns and communities, particularly those in rural areas dependent upon the land and local industry.

Five times this man’s family has been subjected to the estate tax—five times. He goes on:

Between the 1950s and 1980s, vast amounts of money—tens of millions of dollars—were raised to pay the tax. Lands were clear cut, mills liquidated, communities destroyed. . . The next hit will be too great.

Think about this type of family business. They have grown their business, reinvested in it over a century’s worth of time, put almost all their profits back into it, and now this particular company employs over 1,000 Arkansans and has multiple mills that are worth a good bit of money—millions of dollars.

Blahing aside, doesn’t the man make a compelling argument economically, that the death tax destroys wealth and investment and jobs?

Today’s editorial in the Wall Street Journal, “Death Blow,” on the death tax points us to two representative expressions on the issue last week’s Senate budget debate.

The Senate voted 51-48 (roll call) for an amendment sponsored by Sen. Blanche Lincoln (D-AR) and Sen. Jon Kyl (R-AZ) to cut the death tax rate permanently to 35 percent and exempt all estates of less than $10 million per couple ($5 million for a single taxpayer) from any tax. President Obama is seeking a 45 percent rate with just a $7 million exemption.

Senate Majority Leader Harry Reid (D-NV) inveighed against the amendment (his remarks are here). Excerpt:

President Obama inherited a crisis that no President should have to inherit or fix. Instead of focusing full time on the future, he and we in Congress must first clean up the devastating mistakes of the past. We can only turn the page from the recession to recovery if we watch every single taxpayer dollar the way families watch every dollar in their budget. Every dollar counts.

That is why it is so stunning, so outrageous, that some would choose this hour of national crisis to push an amendment to slash the estate tax for the superwealthy. This isn’t for the wealthy; this is for the superwealthy. Yet that is what we see here today.

Superwealthy? Others see jobs creators. Sen. Lincoln had moments earlier recounted a letter in a newspaper from a member of a family who runs a timber operation in southwest Arkansas, a family business since 1907 — and his family had been hit five times by the estate tax. From Sen. Lincoln’s remarks:

Think about this type of family business. They have grown their business, reinvested in it over a century’s worth of time, put almost all their profits back into it, and now this particular company employs over 1,000 Arkansans and has multiple mills that are worth a good bit of money—millions of dollars.

This amendment provides real relief to our family-owned businesses. In a time when our Government has handed out billions upon billions to failed Wall Street banks, it is time we provide a little relief to our businesses on Main Street that are in need of help right now. These are people who employ more than half the workers in Arkansas. These are the people who, if we reform the estate tax, will invest in their businesses and create more jobs.

Our emphasis. And the economic reality speaks far louder than invidious labels.

Covering the announcement by Sen. Blanche Lincoln (D-AR) that she will oppose the Employee Free Choice Act, The Hill cites her statement:

“I consider both the labor and the business communities to be my friends.  However, now that we need all hands on deck, including business and labor, to get our economy moving again, this issue is dividing us,” Lincoln said in a statement. “While I may not have been clear about my position in the past, I am stating today that I cannot support Employee Free Choice Act in its current form and I can’t support efforts to bring it to Senate consideration in its current form.”

And…

“I will consider alternatives that have the support of both business and labor but my pledge today is to focus my full attention on the priorities I have mentioned that affect every working family in Arkansas,” Lincoln said.

When Senator Specter (R-PA) announced his opposition, organized labor generally made nice, trying to keep the lines of communication open with him. But with Lincoln…

“Senator Lincoln’s decision to stand with Big Business over working families at a time when CEOs make 344 times that of their average employee, and as jobs disappear by the minute, is disappointing at best. Yet we share Majority Leader Reid’s belief that our efforts to improve the working conditions and lives of millions of Americans through the Employee Free Choice Act will not be derailed,” said Jon Youngdahl, political director for the Service Employees International Union.

Unions say Lincoln abandons working families. That’s tough. (UPDATE: A vague statement, that. What we meant was, that’s certainly harsh rhetoric from the unions.)

Meanwhile, from the Arkansas Lincoln to the Nebraska Lincoln, where Stewart Acuff whistles past labor’s political graveyard. From the Journal-Star, “Unions near victory, labor official says”:

Organized labor is “very close” to winning a breakthrough legislative victory that could help restore a healthy middle class, a top national union official said in Lincoln.

“We want to reverse a 30-year assault on the freedom to form unions and bargain collectively,” said Stewart Acuff, special assistant to AFL-CIO President John Sweeney.