Parties Near Deal on Extensions of Unemployment and Tax Provisions
March 9th, 2010 - Congressional Quarterly
By Richard Rubin

The Senate will begin wrapping up its work on a package of tax breaks and safety-net spending Tuesday with votes on amendments and a motion to limit debate.

Leaders from both parties are close to an agreement on how to finish the bill (HR 4213) this week, said Minority Whip Jon Kyl, R-Ariz.

Votes are expected Tuesday morning on two pairs of side-by-side amendments. Senators will vote later in the day on a cloture motion filed March 5 by Majority Leader Harry Reid, D-Nev. It was not clear Monday whether Republicans would yield back post-cloture time or force the Democrats to wait until later in the week to pass the bill.

The legislation, with an estimated cost of $137.9 billion before amendments, would extend long-term unemployment benefits and health insurance subsidies for jobless workers through Dec. 31. It also would prevent a cut in physicians’ Medicare reimbursement rates and provide temporary aid to states struggling to cover Medicaid costs. The measure includes more than $30 billion in one-year extensions of tax breaks that lapsed last year, including the research and development tax credit.

Most of the bill’s provisions are not controversial. But while Democrats argue that the weak economy justifies more “emergency” spending without revenue increases or spending reductions to offset it, Republicans contend that the cost of the bill should be offset.

Competing Amendments

The first set of amendments to be considered Tuesday concern the transparency of federal spending. The Republican version, offered by Tom Coburn of Oklahoma, would require prominent display on the Senate’s Web site of the amount of spending that has been exempted from pay-as-you-go requirements, the amount of spending authorized in Senate-passed legislation and the number of government programs created by Senate-passed bills.

The alternative, proposed by Finance Chairman Max Baucus, D-Mont., would require links to Congressional Budget Office documents explaining the fiscal effects of Senate-passed legislation.

The Democratic proposal in the second pair of amendments comes from Patty Murray of Washington. It includes a $1.3 billion, six-month extension of the Emergency Fund of the Temporary Assistance to Needy Families program. The fund is set to expire Sept. 30. The amendment would also appropriate $1.3 billion for workforce-development programs that include summer jobs for youth.

The cost of Murray’s amendment would be offset by changing how Medicare enrolls low-income beneficiaries in prescription drug plans and by eliminating the advance earned-income tax credit in 2011. The credit allows low-income families to claim tax breaks throughout the year. The Obama administration has supported that offset, arguing that the program is ineffective.

Republicans expect to offer an alternative, but details were not available Monday.

Democrats won a key vote last week when Republican Susan Collins of Maine joined all members of the Democratic Caucus on a 60-37 tally to prevent the emergency spending designation from being stripped from the safety-net provisions. That vote signaled that Democrats could likely overcome a cloture hurdle and that they will not need to find offsets.

The Senate adopted a number of amendments to the bill last week by voice vote. But as the cloture vote nears, controversial amendments — particularly non-germane ones — now seem unlikely to be considered. That includes a closely watched proposal from Jim Webb, D-Va., and
Barbara Boxer, D-Calif., to impose a tax on bonuses paid in 2009 to executives at financial institutions that received at least $5 billion from the financial industry bailout program (PL 110-343).

House May Differ

The legislation’s prospects in the House are uncertain. Democrats there are still clamoring for more infrastructure spending in their jobs creation legislation, and they also may object to some of the revenue-raising offsets in the Senate bill.

President Obama has eyed some of the bill’s offsets — such as the codification of the judicial “economic substance” doctrine on tax-motivated transactions and a curb on paper manufacturers’ ability to claim a tax credit for “black liquor,” a byproduct — to help pay for the final version of health care legislation.

The House’s version of the tax extenders bill paid for itself by changing the tax treatment of the “carried interest” income of private equity fund managers and venture capitalists, but that idea continues to have relatively little support in the Senate.

Kathleen Hunter contributed to this story.