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Senators Hash Out Extenders Compromise Senators Hash Out Extenders Compromise

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Senators Hash Out Extenders Compromise

Senate Democratic and Republican leaders are beginning to hammer out a compromise that could enable both sides to claim victory in the debate over offsetting a package of expiring tax breaks.

The discussions began even as the Senate failed to achieve cloture, again, on the motion to proceed to the House-passed, $55.5 billion tax bill, falling eight votes short. For Senate Minority Leader McConnell, the vote was a show of strength designed to force Democrats to the negotiating table. "I've talked to Sen. McConnell about some ideas on next steps," Finance Chairman Max Baucus said after the vote.


Republicans are demanding that only new tax provisions should require offsets, not extensions of current tax cuts. That means there could be potential for a deal that only offsets some of the provisions that build on current law or are new policies, thus not "straight" extensions.

On the merits, few Republicans have specifically objected to an offset in the bill raising $24.3 billion by targeting wealthy hedge fund managers' offshore deferred income, only that it should not apply to existing tax policies.

Another offset, delaying by 10 years a tax break for multinational firms set to take effect next year, has run into more trouble with Republicans.


Baucus declined to comment on the possibility of scaling back the offsets. "We're talking," he reiterated.

House Democrats are continuing to demand that the entire package comply with pay/go rules, which could muddy the outcome.

"I don't know how many times I have to say it, but let me repeat for my Republican colleagues in the Senate: This legislation will not be considered in the House unless its costs are offset," House Majority Leader Hoyer said in a statement. Hoyer said a letter to Senate leaders outlining the House's position now has 218 signatures.

The Senate outcome was not really in doubt, but McConnell and his top lieutenants were taking the cloture vote seriously. He called in a group of about 20 business lobbyists to meet Tuesday morning with himself, Minority Whip Kyl and Finance ranking member Charles Grassley that was described by one attendee as a "come-to-Jesus" meeting.


It included representatives from General Electric, Citigroup, Caterpillar and Whirlpool, who were among those who signed a letter Monday advocating passage of the extender bill.

The companies support tax break extensions like the active financing exemption from taxes on multinational firms' income from overseas business activities and the research and development credit.

Trade groups such as the Securities Industry and Financial Markets Association as well as some outside consultants representing clients affected by the bill were at the meeting.

All of the attendees represented interests that in one form or another have been willing to overlook the offsets provided in the tax bill if it meant swift enactment of the tax incentives.

Industry officials at first feared the meeting would provide GOP leaders an opportunity to grill them for appearing to side with the Democrats. One attendee said initially none of the lobbyists wanted to sit on a couch near the GOP leaders at the meeting. "No one wanted to get within arms' length of them at first, but it wasn't as bad as I thought," the lobbyist said.

Attendees said GOP leaders said to stick with them if they wanted their tax breaks passed. "The general message was that Senate Republicans are willing to sit down and negotiate with the Democrats right now, today after this vote even, but that we're going to negotiate from a position of strength," said Eric Ueland, who was chief of staff for former Senate Majority Leader Bill Frist, R-Tenn., and now lobbies for The Duberstein Group.

Another attendee, who declined to be named, said GOP leaders noted House Democrats have dropped their demands to offset other legislation, such as the alternative minimum tax, GI Bill expansion and unemployment insurance benefits, while insisting on offsetting the business tax breaks.

"The point was that House Democrats have decided that things that are important to business are at the absolute bottom of their priority list," the lobbyist said.

A GOP leadership aide said the purpose of the meeting in part was to assuage their concerns that the extenders bill won't become law without offsets. "We acknowledge that everyone has a vested interest in the extenders bill, but some of them are almost in panic mode, to the point where they're ready to sell their souls to the devil," the aide said. "The message was to come together as a bloc as opposed to trying to pick off Republican members one by one."

Two Republicans did in fact switch their votes from last week to support cloture, although it still failed, 52-44: Sens. Susan Collins of Maine and Norm Coleman of Minnesota, who both face tough re-election fights.

They said they voted against the initial cloture motion because it was not immediately clear Baucus would unveil his substitute containing a one-year, AMT patch. They said they continued to favor the GOP substitute, however, which does not contain a $1.5 billion tax break for trial lawyers and a $1.1 billion earmark to help build a rail line in New York City.

This article appears in the June 21, 2008 edition of NJ Daily.

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