The bill wasn’t negotiable, until. . . it was. On the main points, the tax bill introduced by Harry Reid last night contains the main points outlined by President Obama – a two-year extension of the Bush tax cuts, a two-year extension of the estate tax at drastically low rates, a 13-month unemployment insurance extension, several refundable tax credits from the stimulus, and a payroll tax cut of 2%. But a whole host of tax extenders also made their way into the bill, particularly on the renewable energy side.
I speculated yesterday that something like the Renewable Energy Grant program would have to get into the bill to give a “victory” to skeptical Democrats. So far, that specific program hasn’t made it, although lawmakers are pushing for that hard – 17 Senators and 81 Congressmembers signed a letter to that effect Thursday. But what is there includes extensions of tax credits for energy-efficient appliances and homes, nonbusiness energy property (like windows), ethanol (at the same rates as before; there was thought this would be reduced), wind and solar energy production, biodiesel, and more.
There are dozens of other small tax extenders in the bill. Most of them look familiar from the old “tax extenders” bill of the past year, though I’m sure there are a couple surprises. You have things like deductions for primary and secondary school teachers for supplies, tax-free distributions of retirement accounts for charitable purposes, an employer wage credit for employees who are members of the armed services, a railroad track maintenance credit, subsidies for commuters, a research tax credit, the American Samoa economic development credit, a “Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico,” and much more. None of these are particularly large, but the bill has become something of a Christmas tree, fitting for this holiday season. Reid did not, as far as I can tell, sneak the provision on legalizing online poker into the bill. Maybe next omnibus.
The bill has been scored as well. It would increase the deficit by $857 billion over 10 years, with pretty much all of that coming in the next 2 years. $801 billion comes from the tax extensions, and $56 billion from extending unemployment insurance.
The Build America Bonds program, which has become a huge source of lending for municipalities, did not get renewed by this bill.
The President predicted the bill would pass, and in the Senate that’s probably true; the first cloture vote will come on Monday. But members of the House remain angered by the deal, shouting “Just say no!” in a caucus meeting as they voted against bringing the bill to the floor. It’s unclear whether the energy sweeteners will be enough. However, for historical reference, the changes that put TARP over the top included – extensions of expiring renewable energy tax credits.