Tax-Credit Vote Reveals Conflicted House Democrats

Some Dems back the bill, while others accuse GOP of a double standard by not finding a pay-for to fund the measure.

WASHINGTON, DC - JANUARY 16: House Minority Leader Rep. Nancy Pelosi (D-CA) pauses during her weekly news conference on Capitol Hill, January 16, 2014 in Washington, DC. Pelosi called on House Speaker John Boehner to cancel next week's recess until the House passes an extension of unemployment insurance. 
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Billy House
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Billy House
May 9, 2014, 8:21 a.m.

De­fy­ing a White House veto threat, nearly one-third of all House Demo­crats joined Re­pub­lic­ans Fri­day in passing by 274-131 a bill to make per­man­ent a re­search and de­vel­op­ment tax cred­it for busi­nesses — even though its $156 bil­lion cost over 10 years is not paid for.

In the end, 62 Demo­crats joined with 212 Re­pub­lic­ans in ap­prov­ing the meas­ure, as Re­pub­lic­ans em­phas­ized dur­ing this midterm elec­tion year that ex­tend­ing the tax cred­it was im­port­ant to the eco­nomy and jobs. The pre­vi­ous cred­it had ex­pired on Dec. 31, 2013.

Demo­crat­ic lead­ers led by Minor­ity Whip Steny Hoy­er had joined the White House this week in mak­ing the ab­sence of a spend­ing off­set an is­sue — even though they’d sup­por­ted ex­tend­ing the tax break in the past and said its aim re­mained laud­able.

But this time around, they in­sisted, Re­pub­lic­ans were be­ing in­con­sist­ent by back­ing such a bill, while at the same time in­sist­ing oth­er items be fully paid for — such as an ex­ten­sion of emer­gency un­em­ploy­ment in­sur­ance.

Ma­jor­ity Lead­er Eric Can­tor re­spon­ded by call­ing Demo­crats “all talk and no ac­tion on jobs.”

Clearly, some of the Demo­crats who ended up back­ing the meas­ure were con­flic­ted, in­clud­ing Rep. John Lar­son of Con­necti­c­ut.

Al­though lis­ted as a co­spon­sor with Re­pub­lic­an spon­sor Kev­in Brady of Texas, Lar­son had ac­tu­ally voted against the bill when it was be­fore the Ways and Means Com­mit­tee.

In a state­ment, Lar­son provided a tor­tured ex­plan­a­tion for why he voted in com­mit­tee against the bill  that he sponsored, and then for it on the House floor, abandon­ing Demo­crat­ic lead­ers. 

Lar­son said the R&D cred­it “im­pacts a large num­ber of Con­necti­c­ut busi­nesses and man­u­fac­tur­ers” and that “by en­cour­aging in­vest­ment in in­nov­a­tion, com­pan­ies and man­u­fac­tur­ers are bet­ter po­si­tioned to cre­ate eco­nom­ic de­vel­op­ment and job growth op­por­tun­it­ies.”

But he ad­ded, “Provid­ing cer­tainty and the abil­ity to plan ahead is im­port­ant to re­search, de­vel­op­ment and in­nov­a­tion and it should be ap­plied equally across the board to the al­tern­at­ive fuel pro­du­cer and to the teach­er at our loc­al schools … i am dis­ap­poin­ted that, rather than take up a com­pre­hens­ive pack­age of ex­tenders, the ma­jor­ity has de­cided to pick win­ners and losers and fur­ther ig­nores how this will be paid for.”

Still, said Lar­son, “I will not let the per­fect be­come the en­emy of the good.”

Rep. John Camp­bell of Cali­for­nia was the only Re­pub­lic­an to vote against the meas­ure, while 26 oth­er House mem­bers did not cast votes on the bill, at all.

In a state­ment, he ex­plained that, “Above all, we need to lower the cor­por­ate tax rate in this coun­try. However, we can­not get to the point where we can lower this rate without elim­in­at­ing all of the spe­cial cred­its first.” 

“The R&D tax cred­it is one of the biggest and most un­bal­anced of these cred­its. Rather than re­in­state it for only a se­lect few in­dus­tries, we should have taken this op­por­tun­ity to lower the rate for every­one,” said Camp­bell.

The fu­ture of the tax ex­tender is in doubt, however. It is un­clear what the Sen­ate will do. And while the Of­fice of Man­age­ment and Budget has said it would ad­vise the pres­id­ent to veto the meas­ure, the White House has in­dic­ated sup­port for it if it’s paid for.

“I hope the Sen­ate will quickly take up and pass this bill, and join Re­pub­lic­ans in our on­go­ing ef­fort to ex­pand eco­nom­ic op­por­tun­ity and se­cur­ity for all Amer­ic­ans,” said Speak­er John Boehner.

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