WASHINGTON Unfazed by pressure from Democrats and the business community, Republicans for the second time in a week prevented the Senate from taking up a tax bill providing more than $50 billion in renewable energy credits and tax breaks for families and businesses.
The vote Tuesday to move to the legislation was 52-44, eight short of the 60 votes needed. Only five Republicans voted to end the filibuster against action on the bill: others objected to the Democratic plan to pay for the tax relief by making some hedge fund managers and multinational corporations pay more taxes.
Opponents argued that tax relief should not be matched with what they regarded as tax increases.
On June 10, the vote to move to the bill was 50-44, 10 short.
Following that first vote, House Democrats delievered an ultimatum to the Senate, making clear that they would not vote to extend the dozens of expired or soon-to-expire tax breaks for businesses and families unless Congress found ways to replace lost revenues.
On Friday, Senate Majority Leader Harry Reid, D-Nev., and other Democratic leaders joined in with a letter to Republican leader Mitch McConnell, R-Ky.: "If Senate Republicans continue to maintain the preposterous fiction that closing a tax loophole for multimillionaires amounts to a violation of fundamental principle, you will be denying tax relief to millions of middle-class Americans in the process."
But McConnell, in an exchange with Reid on the Senate floor Monday, stood his ground. Republicans support the tax extensions, he said, but "short-term tax extensions shouldn't be the occasion for permanent tax increases." That's akin to transforming "the annual ritual of extending current law tax relief into a stealth exercise in increasing the size of government," he said.
McConnell noted that the House version with revenue offsets, which passed last month on a 263-160 vote, engendered a presidential veto threat.
Democrats in both the House and Senate are proposing to raise some $54 billion by preventing hedge fund managers and others from deferring certain overseas profits and by delaying a tax break that multinationals are slated to receive in the coming years.
Presumed Democratic presidential nominee Sen. Barack Obama was not present for the vote, but his office said he supported the bill and the measures to pay for the tax relief. "We need to get back on track to honest and transparent budgeting that is fair and fiscally responsible," his press office said in a statement. Sen. John McCain, the presumed GOP nominee for the White House, also did not vote.
The legislation contains some $17 billion in tax credits to help industries develop renewable energy sources including wind, solar, biomass, geothermal and plug-in electric vehicles, as well as to promote energy conservation in commercial buildings.
The package also extends for a year the research and development tax credit, and keeps alive deductions for higher education tuition, state and local general sales taxes, teacher expenses and charitable contributions.
Earlier this month more than 300 high-tech and manufacturing companies, normally sympathetic to GOP anti-tax policies, praised the House bill and urged Congress to act quickly. They said that failure to extend the tax credits "will bring investment in renewable energy and energy efficiency projects to a standstill."
Senate Finance Committee Chairman Max Baucus, D-Mont., said he planned to attach a provision shielding for a year more than 20 million taxpayers in danger of getting hit this year by the alternative minimum tax. Baucus, differing from his Democratic colleagues in the House, offered no revenue offsets for the estimated $61 billion cost of the AMT fix.
Last December, after a long fight, the Senate approach prevailed when Congress approved an AMT fix that was not paid for.