House approves slate of tax breaks

The House on Wednesday passed a one-year renewal of more than 50 tax breaks that expired at the end of 2013, putting the measure on a path toward President Obama’s desk. 

Passed 378-46, the measure would extend nearly all of the tax breaks until just the end of this year, at a cost of almost $42 billion. The dissenting votes were close to evenly split between Democrats and Republicans.

In advance of the vote, Democratic tax writers in the Senate had been pushing for their preferred two-year extensions of the tax breaks.

But a spokeswoman for Finance Committee Chairman Ron Wyden (D-Ore.) all but declared on Wednesday that the Senate would have to take the House bill, after House Republicans rejected what she called a “reasonable, balanced deal” over the weekend.

That followed the White House and House Democrats essentially saying that the one-year deal is better than a broader agreement being sought last week.

“We are disappointed that at this point there doesn’t appear to be a procedural path forward,” said spokeswoman Lindsey Held.

{mosads}The list of incentives extended by the House included popular credits for both corporate America and individuals, like incentives for business research and others that help school teachers and distressed homeowners. Other incentives in the package are more controversial, particularly a tax credit prized by the wind industry. 

House Republicans turned to the one-year extension after talks between Senate Majority Leader Harry Reid (D-Nev.) and Ways and Means Committee Chairman Dave Camp (R-Mich.) over the broader deal broke down following a veto threat from President Obama.

Top lawmakers from both parties have said that the only thing worse than a one-year deal is no deal at all, a sentiment echoed by many of the corporate interests that believe the short-term extension would make it harder for businesses to plan for next year.

“This on-again, off-again style of legislating on a temporary basis is a terrible way to make tax policy. We’re the only nation in the world that lets large pieces of its tax code expire,” Camp said.

The White House and other Democrats objected to the broader proposal, which likely would have cost in excess of $400 billion, because it wouldn’t permanently extend two tax credits for the working poor: the Earned Income Tax Credit and the Child Tax Credit.

GOP lawmakers have blamed the president for undercutting the deal and insist reviving the provisions only through 2014 is now the best that they can do.

House Democrats argued the one-year bill was inadequate because the tax credits won’t be offset.

“This bill before us today is wholly inadequate. Not only does it add to the deficit billions of dollars, we kick the can down the road,” said Rep. Bill Pascrell (D-N.J.).

The Club for Growth, an influential conservative group, urged lawmakers to vote against the package, which it argued is “mainly a hodge-podge of special interest earmarks in the federal tax code.”

But Camp noted that the tax credits have always been renewed without pay-fors.

“These measures have never been offset. These measures have never been paid for,” Camp said.

Among the few incentives not to be restored are tax breaks for plug-in scooters, which have long been championed by Wyden. The House bill also wouldn’t extend a healthcare credit for laid-off workers. 

Camp told reporters this week that leaving out the electric motorcycle incentives was merely an oversight, even though Republicans have also blamed Wyden for his role in scuttling the broader deal, and that the healthcare credit could be dealt with in broader trade negotiations. 

Wyden had suggested Wednesday that he was continuing to work to pass a two-year package, and had the support of Democrats on his committee. 

Sen. Michael Bennet (D-Colo.) chided the House GOP for coalescing behind a “three-week extension,” and Sen. Sherrod Brown (D-Ohio) said the House was “again playing games.”

“I don’t understand their plans,” Brown said on a conference call. “I don’t know a lot of people who think the way they do.”

But Reid, facing a packed Senate schedule, had left the door wide open to take up the House bill, and lawmakers in both chambers and both parties believed that was the most likely outcome.

Senate Majority Whip Dick Durbin (D-Ill.) said as much on Wednesday, telling reporters, “I don’t think there’s any deal in the offing at this point.”

The House could pair up the tax break package with a broadly popular measure, known as the ABLE Act, which would allow people with disabilities to get tax-free savings accounts. That also spurred more support on the other side of the Capitol.

“I’m going to support any effort to get ABLE done,” said Sen. Bob Casey Jr. (D-Pa.), the ABLE Act’s Senate sponsor, adding that the one-year tax breaks bill “may be the best that we can do at this time.” 

—This post has been updated from an earlier version.