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Dems Accuse GOP of Hypocrisy for Supporting Costly Tax Credit Dems Accuse GOP of Hypocrisy for Supporting Costly Tax Credit

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Dems Accuse GOP of Hypocrisy for Supporting Costly Tax Credit

A research and development bill would cost $156 billion over 10 years—and Republicans have not proposed revenue to offset it.

House Minority Whip Steny Hoyer(UPI/Kevin Dietsch)

Despite a White House veto threat, the GOP-led House plans to vote Friday on a bill making permanent a research-and-development tax credit for businesses—without offsetting the $156 billion cost over the next decade.

The White House and some Democrats who oppose the measure as-is have acknowledged they support the aim, but they won't back the bill because they say it represents a case of political inconsistency—if not hypocrisy. They point out that Republicans continue to insist that an extension of long-term unemployment insurance be fully paid for.

Minority Whip Steny Hoyer told reporters this week that "we are for the R&D tax credit," but that Republicans "are doing the right thing in the wrong way."


Majority Leader Eric Cantor responded to the Democratic positioning by calling it "ironic" and proof that Democrats are "all talk and no action on jobs," which he said the measure will help to produce.

Meanwhile, as a precursor to the floor vote, the Office of Management and Budget on Tuesday released a statement saying the president will be advised to veto the measure if it passes both chambers. The statement described the projected cost as adding to the nation's deficit over 10 years "more than 15 times the cost of the proposed extension of the emergency unemployment benefits."

But Cantor argued, "This has been a provision that has expired over and over again over the last 30 years." He added, "This is one of the most generative things we can do from a policy standpoint that has been confirmed by independent economic analysis, to grow jobs and to have America work again for more people." 

Cantor noted that "the president himself has come out on record to be for the permanent extension of [the] R&D tax credit."

In fact, in its statement this week, OMB did acknowledge that the administration would be supportive of making the R&D credit permanent—that is, if the costs of the bill were offset by such things as closing tax loopholes, for instance.

OMB even lauded the measure as one that would allow businesses to make investments now with confidence that they will be eligible for the credit in the future. And four-fifths of the R&D credit, the White House explained, is attributable to salaries of U.S. workers performing U.S.-based research—meaning that the credit helps create high-skilled jobs and encourages new innovations and future productivity.

But it also noted that House Republicans had passed a budget resolution that required offsetting any tax extenders that were made permanent with other revenue measures. Republicans "are rushing" to make business tax cuts permanent, OMB said, but are proposing to let other improvements to the Earned Income Tax Credit, Child Tax Credit, and tax credits for education expire.

"The administration wants to work with Congress to make progress on measures that strengthen the economy and help middle-class families, including pro-growth business tax reform," the White House said. "However, making traditional tax extenders permanent without offsets represents the wrong approach."

Hoyer complained that when it comes to feeding children and "helping people who are unemployed through no fault of their own, assisting people struck by a vicious storm named Sandy—then there's a lot of discussion on the Republican side about, 'we have to pay for things.' "

But when it comes to tax cuts, Hoyer said, there's a different GOP tune.

"This takes no courage to put on the floor or to vote for. None. Zero. Zip. Tax cuts are easy to vote for," Hoyer said. "Paying for what you buy is difficult to vote for. And all of the wringing of hands and gnashing of teeth with reference to the deficit seems to go by the boards when the Republicans talk of tax cuts."

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