Senators appeared to be moving toward a bipartisan deal late Wednesday on a package of short-term stimulus efforts totaling around $81 billion, although the final contents and price tag were still being negotiated.
The measure would be the first installment in a series of bills encompassing what Majority Leader Reid this week called a "jobs agenda," designed to win 60 votes and demonstrate at least some movement before the Presidents Day recess.
Potential flashpoints remained, such as a three-month delay in looming Medicare physician payment cuts that might hitch a ride. Democratic leaders nonetheless scheduled a briefing for this morning to announce details of their proposals, meaning they were fairly confident a deal could be reached. The package would head to the floor next week.
One area of general agreement was on including a payroll tax cut for new jobs, based on a proposal from Sens. Charles Schumer, D-N.Y., and Orrin Hatch, R-Utah. Their plan would cost roughly $11 billion, although there was some discussion of boosting that figure to as much as $18 billion. That bipartisan support for a new jobs tax break was in contrast with skeptical House Democrats, a number of whom raised concerns at a Ways and Means hearing Wednesday on President Obama's budget proposals. (See related story, page 9.)
The payroll tax proposal would be paired with an extension of higher expensing limits for small business equipment purchases, and measures to pump money into infrastructure investment. Those are an expanded Build America Bonds program, which subsidizes interest payments on taxable bonds issued by state and local governments, and an extension of surface transportation trust fund financing until the end of the year.
The Highway Trust Fund extension would cost around $20 billion but is technically revenue-neutral. It is paid for with interest owed from the general fund, which Republicans, including Budget ranking member Judd Gregg, have labeled a "gimmick." The move would also postpone a debate on contentious financing options, such as raising the gasoline tax, until after the midterm elections.
Even Environment and Public Works ranking member James Inhofe, normally a staunch supporter of highway investments, expressed reservations about the jobs bill. He said Republicans have been shut out of the process despite calls by Obama for better cooperation between the two parties. "I don't think that the Democrats have learned anything since the Massachusetts election," Inhofe said. "It's just business as usual."
Hatch and Finance ranking member Chuck Grassley appeared to be involved in the talks on the GOP side, however.
Another piece of the bill would include $33 billion in extensions of tax breaks that Congress let lapse last year, such as the research and development tax credit, a credit for biodiesel production and deduction for state and local sales taxes. It would be a slightly more expansive version of a tax "extender" bill passed by the House, including renewal of a capital gains break on timber sales sought by lawmakers like Senate Agriculture Chairwoman Blanche Lincoln, that was left out by the House.
The package would also provide around $33 billion for three-month extensions of unemployment insurance and health subsidies for laid-off workers, as well as the Medicare physician payment fix. That patch was running into concerns from some Republicans and physicians advocating for a longer-term reversal of the looming 21 percent payment cuts. All three programs expire on Feb. 28 if Congress does not take action.
Negotiators were still debating the amount of offsets in the mix, but appeared to be closing in on paying for as much as $48 billion, or more than half of the combined package. The biggest single revenue-raiser was shaping up to be eliminating the potential for paper firms to claim a cellulosic biofuels tax credit, bringing in $24 billion. Senators also planned to include provisions cracking down on the use of offshore accounts to shelter investments from U.S. tax collectors, raising another $7 billion.
Those measures alone could practically pay for either the tax extenders, or the health and employment benefits expiring Feb. 28. Sources said that was designed so that Republicans would not appear to be offsetting tax cuts, and so Democrats would not be seen as offsetting social services spending.
Of benefit to cash-strapped companies facing mandated pension contributions, the measure might also include relief enabling those firms to delay their payments and spread them out over a longer period of time. The result would free up more income for hiring and investments, which would actually raise around $7 billion because the money would be taxable.
Other potential revenue-raisers included a delay in new interest expensing rules for multinational firms; codifying the "economic substance" doctrine requiring firms to prove business transactions had a purpose other than tax avoidance; and dipping into a fund for unspecified improvements to Medicare.
This article appeared in the Saturday, February 6, 2010 edition of National Journal Daily.
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