CQ TODAY ONLINE NEWS
– TAXES
Oct. 3, 2008 – 1:46 p.m.
Comprehensive Tax Extension Package Sent to Bush
By Richard Rubin, CQ Staff
The tax-extenders endgame for the 110th Congress was played out on Friday, and the undisputed winner was the U.S. Senate.
The Senate emerged victorious from a two-year tax policy fight, getting its way on budgetary offsets, energy policy, rural schools, disaster relief and several other issues.
The Senate attached its version of a year-end tax bill (
By a final vote of 263-171, the House reluctantly took it, clearing the combined bill Friday. President Bush was expected to sign the measure quickly.
“I really resent the fact that they did do that,” said Ways and Means member Bill Pascrell Jr. , D-N.J.
House Democratic leaders had refused to put the Senate tax bill on the floor. But in the end, they were forced to accept it in full.
The tax portion of the Senate-passed bailout bill would provide a one-year “patch” to the alternative minimum tax, extend dozens of expiring tax breaks for businesses and individuals, offer incentives for renewable energy and help victims of natural disasters.
The House wanted to do all of the above, but in somewhat different ways. The conservative Blue Dog Democrats wanted the extensions of business and individual tax breaks fully offset with revenue increases under the pay-as-you-go rule, and the House passed a bill (
Senate Republicans, however, have consistently balked at offsets for extensions of current tax policy. And with Democrats holding only a 51-49 operating edge in the Senate, they could not muster the 60 votes needed to overcome a GOP filibuster and pass a bill more to their liking.
The final Senate bill was a bipartisan compromise that included only partial offsets for extensions of provisions such as the research and development tax credit, an enhanced child tax credit and the optional deduction for state sales taxes.
House Majority Leader Steny H. Hoyer , D-Md., stood with the Blue Dogs on Monday morning and said that because of the disparity over offsets, the House would adjourn without taking up the Senate bill. But by Friday, Hoyer was forced to relent in order to get the financial bailout bill cleared.
“It was not (a) responsible thing to do,” he said. “You can’t tell me they couldn’t have gotten that thing through the Senate without that in there. They could have,” groused Mike Ross , D-Ark., a prominent Blue Dog.
Substantive Differences
Comprehensive Tax Extension Package Sent to Bush
Liberal Democrats are also disgruntled. They don’t like the Senate’s energy tax provisions, which contain more incentives for coal and provide a new incentive for oil shale refining.
“The Senate’s incentives for these dirty fuels make it more difficult to break the grip of fossil fuels and greatly worsen greenhouse gas pollution,” a group of liberal Democrats wrote in a letter to Speaker Nancy Pelosi , D-Calif. “Imposing even more rewards for dirty fuels would completely undermine our initiative whose longstanding purpose is to promote a clean energy economy.”
Those provisions had been absent from House versions of energy tax legislation, including the most recent one sent to the Senate.
The House also will not see its version of disaster tax provisions (
The Senate bill, written largely by Charles E. Grassley , R-Iowa, also would create a national disaster program, but only for 2008 and 2009. The Senate bill also would give Midwest flood victims a more generous collection of tax assistance, modeled on the legislation (PL 109-73) enacted shortly after Hurricane Katrina in 2005. Residents of the hurricane-battered Gulf Coast also get tax breaks beyond the national program.
“It was the grandaddy of all jams,” Kind said, speaking both of the disaster provisions and the paucity of offsets. “It’s shameful what they did.”
Perhaps most importantly for House members, who carefully guard their tax-writing prerogative, a downside of the Senate’s success is simply that the Senate succeeded.
Ways and Means Chairman Charles B. Rangel , D-N.Y., issued a blistering statement Thursday that criticized the Senate’s 60-vote threshold and the compromises that flow from that.
“The Senate can’t believe this is the way the Congress and the House will move forward in the future,” he said.
The Senate’s decision to link the tax and financial issues forced some tough choices for lawmakers in that chamber, too.
Sen. Maria Cantwell , who helped craft the Senate compromise and became a champion for the renewable energy industry, voted against the bill on Wednesday night.
“I am not going to vote for this legislation tonight based on whether someone crams in tax credits, for which I actually have fought so hard,” she said during a floor speech. “I am going to render my decision based on what I think is important for the American people.”
Liriel Higa contributed to this report.
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