House Eyes Voting Soon On Extenders

Wed. May 7, 2008


The House might vote on a major tax bill before the Memorial Day recess extending expiring provisions such as the research and development credit and incentives for renewable energy production, sources said Tuesday.

House Ways and Means Chairman Charles Rangel has not settled on a final package, and panel members are set to huddle today to discuss options. But the strategy appears driven in part by House Speaker Pelosi's decision not to include a roughly $6 billion package of tax credits for solar, wind, geothermal and other alternative energies in the war supplemental.

Majority Leader Hoyer confirmed the energy tax provisions might be part of a broader extender package and could be on the floor next week. "We are interested in pursuing tax extenders and energy solutions," he told CongressDaily. "We want it paid for and it will be paid for."

A House Democratic leadership aide said an energy proposal, as part of the larger extenders package, will be unveiled soon and come to the floor before Memorial Day. Democratic leadership sources said the package was still being fleshed out, but a number of options were being considered, including renewable energy tax credits akin to what has passed the House multiple times and a provision suspending the filling of the Strategic Petroleum Reserve.

Hoyer did not mention that the extenders package would include language regarding the reserve but said suspending deposits of crude oil in the reserve is a short-term option "which would dampen down demand, which is obviously driving [gas] prices. We think that could be helpful."

It will also be part of a gas price plan Senate Democrats will unveil today.

House Democrats might give a boost to the latest effort to extend expiring renewable incentives if they avoid major repeals of oil and gas industry incentives.

The House several times this Congress -- most recently an $18 billion package in late February -- passed renewable energy tax plans paid for by repealing oil and gas incentives only to see it die in the Senate.

Now Democrats might be looking at making sure the renewable incentives can get through quickly.

"We've made the point about what should happen," Rep. Earl Blumenauer, D-Ore., said. While Democrats will bring back the idea of repealing billions in oil and gas incentives early next year, "in the short term, let's see if we can move forward and solve the problem," Blumenauer said.

The goal, he said, is to "not to have the alternative energy industry lose its momentum. There is a willingness to be flexible." Renewable energy advocates say tax incentives that expire this year need to be extended as early as possible to give certainty to pending projects.

Democrats say they may include some offsets that have been part of recent Bush administration budget requests. "There are a lot of ideas bouncing around," Rep. Jay Inslee, D-Wash., said. "I don't think it's down on paper."

Blumenauer said the renewable package might be smaller than February's $18 billion plan, which gave multiyear extensions to wind and solar incentives. "You don't have to do one that large," he said. The wind energy industry could see a one-year extension, for example. "It's not ideal, but they'll get by with a one-year extension," Blumenauer said. "I think everyone agrees solar needs more."

The Senate Finance Committee has already unveiled a $110 billion tax-extension package that includes all provisions that expired last year, like the R&D credit, as well as those expiring this year, such as the renewable energy credits.

It also includes a one-year fix preventing the Alternative Minimum Tax from impacting additional taxpayers next year. Senate Finance Chairman Max Baucus has not unveiled offsets, but he has said the $60 billion AMT patch will likely have to do without offsets.

The pay/go question poses bigger hurdles in the House, where the Blue Dog Coalition holds considerable sway. For that reason, an AMT fix is considered unlikely to make it into the House tax package set for action this month, although final decisions will be up to Rangel.

For now, the primary focus will be on how much available revenue is out there to offset as much tax policy as possible, and will likely focus first on "compliance" measures President Bush included in his budget request, such as a $13 billion proposal to boost reporting of credit-card transactions to the IRS.

Limiting the scope of the bill only to energy tax credits is possible; another option is to add those tax provisions that expired last year. If enough offsets are found, they could include all of the tax "extenders" that expired at the end of last year and those that expire at the end of this year, such as a $4 billion exemption from U.S. taxes on multinationals' "active financing" income from overseas transactions. The total cost of extending the expiring tax provisions for one year is about $50 billion.

The goal is to achieve a bill that has a chance of getting 60 Senate votes, according to senior House aides, and quickly get to Bush's desk. That means the offsets will have to be acceptable to enough Senate Republicans, which could keep the price tag down. In any case, the high cost of energy is likely to be a driver in the debate, sources said. "Gas prices may be a turning point," said one senior Democratic aide.

by Peter Cohn and Darren Goode, with Christian Bourge contributing

Wed. May 7, 2008

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