CQ TODAY ONLINE NEWS
– TAXES
Updated Sept. 29, 2008 – 12:06 p.m.
House Defies Senate Over Tax Extenders
By Richard Rubin, CQ Staff
The House will defy the Senate in a tax showdown, leaving town without resolving a remarkable standoff over legislation to extend dozens of expiring tax provisions.
House Majority Leader Steny H. Hoyer criticized what he called the Senate’s attempt to legislate by blunt force. The House, he said, will stick by its pay-as-you-go budget rule and refuse to consider a Senate-passed bill (
“Sometimes,” said Hoyer, D-Md., “it’s necessary to say, ‘This far, but no farther.’”
Hoyer’s decision will cause extreme distress for business lobbyists who were counting on Congress to extend tax breaks for renewable energy, research and development, and financial-services companies, among others.
They will also be worried by Hoyer’s pronouncement that he has “no intention” of seeking a post-election session to address the issue. He said he would continue to negotiate with the Senate on a compromise, “even if it’s next year.”
The House broke the Senate bill into four pieces, but none of them seem likely to pass, at least not immediately. Senate Majority Leader Harry Reid , D-Nev., attempted to pass one of those bills (
“I would hope that my friends in the House would understand we are doing the best that we can,” Reid said. “If we leave this Congress without having done this, it doesn’t speak well of this Congress
It remains unclear what will happen.
“I think they’ll pick up AMT and they’ll pick up disaster. The ball’s in their court now for those two things,” House Ways and Means Chairman Charles B. Rangel , D-N.Y., said Monday.
He was referring to a House-passed bill (
The AMT patch is particularly important, because without it, 22 million additional taxpayers will face a levy that had been originally intended only for the wealthy.
Despite repeated rebuffs from the Senate, House leaders had introduced two more bills (
Those measures, like earlier versions passed by the House, would be fully offset. Senate Republicans have refused to accept full offsets for provisions that simply continue existing tax policy.
The bills and the House strategy were designed to satisfy conservative Blue Dog Democrats that party leaders were doing all that they could to enforce pay-as-you-go budget rules. Hoyer stood with Blue Dog leaders Monday morning and announced that he would not allow the Senate bill on the floor.
Senators continue to insist that the House consider and pass the catch-all bill (
Hoyer criticized the Senate for waiting to send the bill over, saying it did not give the House enough time to act.
Among other groups that could see crucial tax benefits lapse in the absence of an agreement are financial-services companies that do business overseas, producers of electricity from wind power, businesses that rely on the research and development credit, teachers who deduct out-of-pocket school expenses and taxpayers from states without income taxes who currently are allowed to deduct sales taxes instead.
“The Democrats have failed to produce a result with tax extenders that are vitally important to our economy moving forward,” said Thomas M. Reynolds , R-N.Y. “They run the Senate. They run the House. And they couldn’t get it done.”
Dozens of tax breaks expired at the end of 2007, and more are set to lapse Dec. 31.
The adjournment resolution adopted by the House Monday left open the possibility that leaders could call the chamber back into session at any time prior to the Jan. 3 start of the 111th Congress, whose members will be elected Nov. 4.
And Hoyer didn’t totally preclude a House vote this year on the Senate package.
“We are subject to the call of the chair. So, it’s not the end of the 110th Congress. We haven’t adjourned sine die. . . . It speaks for itself that we have not adjourned sine die,” Hoyer said.
All About Offsets
The basic standoff pits House Democrats’ attempt to comply with pay-as-you-go budget rules against Senate Republicans, who do not want revenue-raising offsets paired with extensions of existing tax policy.
The Senate’s bill would patch the AMT, extend expiring provisions, provide incentives for renewable energy production and conservation and help victims of natural disasters.
After months of false starts and failed cloture votes, the Senate finally agreed to its compromise package. Since then, senators from both parties have insisted that the House clear the Senate bill.
“Some sparring between House and Senate is inevitable at the end of session,” said Sen. Ron Wyden of Oregon, a Finance Committee Democrat who said he had been talking with House leaders. “This is particularly challenging because there is so much on the table that you’re trying to follow both substance and process. I like to think we’re making a little bit of headway.”
Last week, however, the House took that Senate compromise and broke it into four pieces and easily passed all four in separate bills: mental health parity legislation with offsets (
That approach fell flat in the Senate. On Sunday, House leaders split that final bill into two more: an energy tax bill and a collection of other tax extensions, which also include mental health parity and a $3.2 billion extension of a program that helps rural counties with significant amounts of federal land.
“They don’t like our bill, but I think they have to take it,” said Sen. Orrin G. Hatch , R-Utah, a member of the Senate Finance Committee.
Hoyer responded directly to Hatch on Monday, saying, “That is not the way we ought to be legislating.”
Still, the two chambers aren’t terribly far apart in numbers.
The Senate bill contains $150.6 billion in tax breaks and $43.5 billion in offsets. All combined, the four House bills that mirror the Senate legislation contain $137.7 billion in tax breaks and $65.7 billion in offsets.
But inside those numbers is a fierce debate. Blue Dogs, having already conceded defeat on the AMT patch and the disaster bill, are making a stand on the extenders. Backed by Hoyer, the House group of fiscally conservative Democrats worry about the growing national debt and want to prevent the tax bill from costing the government.
Republicans, however, say extensions of existing tax breaks should not be offset, and have used their procedural clout in the Senate to block Democratic efforts to move House-passed bills.
Some members have objected to the specific revenue-raisers in the Senate bill, but for the most part, those are not controversial. They would largely hit oil and gas companies and certain offshore deferred-compensation plans.
The House and Senate do disagree on other details. Senators, led by Charles E. Grassley of Iowa, insisted on a disaster tax package that provided more generous benefits for flood victims in the Midwest and hurricane victims on the Gulf Coast than for other regions.
The Senate also included more provisions that help the coal industry, Alaskan fishermen and commercial recyclers.
The House, meanwhile, wants limits on the wind-energy tax credit and seeks a different structure for a new credit for electric automobiles.
First posted Sept. 29, 2008 8:32 a.m.
Comments
Thank you for providing updates on this improtnatn issue in the midst of all else that is going on today. The 110th Congress will go down in history as the worst "do nothing" Congress ever. Our nation has been dis-served before, but this Congress blind-sided us with its ineptitude. Want proof? No Appropriation bills passed, rushed bail-out legislation with little hearings, no energy fixes, health care ignored, no enviroment, or tax policy improvements, ongoing war funded...the list goes on and on. I will pay my AMT next year, but wonder why I am.
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