Why the Senate Refuses to Pay for Tax Cuts
June 10th, 2008 . by economistmomThe tax extenders bill (H.R. 6049) is coming up in the Senate this week–maybe even today. (Here’s the revenue estimate for the House-passed version.) I’ve commented on the trouble with tax extenders before. But here’s a scoop: today’s CQ.com news notes that it’s not just a handful of Blue Dog Democrats that don’t have a problem paying for (offsetting the cost of) the extension of expiring tax cuts (my emphasis added):
The tax bill’s fate will depend on the outcome of a bruising partisan fight over revenue-raising offsets.
The House passed the bill, 263-160 — with 35 Republican “yes” votes — on May 21. The legislation would provide incentives for renewable energy and institute new tax policies intended to help low-income families, homeowners and trial lawyers. But the inclusion of revenue-raising offsets to comply with congressional pay-as-you-go rules leaves the measure facing the same trouble most tax bills have had during the 110th Congress.
Senate Republicans oppose the revenue-raising offsets, arguing that they are not needed to extend existing law.
Last year, Republicans blocked a similar attempt to offset an “extenders” package (HR 3996), and a number of major tax provisions expired at the end of the year.
The new House-passed bill would raise revenue to cover the cost of reviving those tax breaks and extending others that are set to expire at the end of this year by curtailing an offshore deferred-compensation technique and delaying a rule that benefits multinational corporations.
Business SupportDemocrats say including offsets is fiscally responsible, and they note the relative lack of corporate objections to the specific offsets.
“A lot of the business community wants it, including the offsets, wants to get this bill done. They want the extenders so badly,” said Senate Finance Chairman Max Baucus, D-Mont. “These offsets do not matter to business very much.”
So these Republicans who are refusing to pay for these tax cuts–including the big AMT extension still to come later this year–are only doing it on principle, not for practicality? I.e., are they doing this just to be stubborn? I mean, if Max Baucus is willing to offset a tax cut…
Sure seems that way from this April 23 letter signed by Senate opponents to pay-go-compliant tax extenders. (Thanks to Chuck Konigsberg for posting on his WashingtonBudgetReport.com website.) Note whose signature is on page 4.
