Reid Picks Pelosi's Pocket To Pay For Business Tax Break
In order to fund business tax breaks and an extension of a first-time homebuyers tax credit this week, Harry Reid swiped one of Nancy Pelosi's revenue generators, leaving the House Speaker scrambling at the last minute to find billions to cover a funding gap in her health care reform bill.
As the Senate Majority Leader attempted to move an unemployment-benefits extension through his chamber, he sugared the brew to make it more palatable to the GOP, adding the tax breaks and credit. But he needed money to pay for the billions being spent. In legislative lingo, he needed a "pay-for."
He found it across the Capitol in the House health care bill. To help pay for her bill, Pelosi was proposing a complicated change to the tax code that involves interest expenses and foreign tax-credit limits. A summary of it follows this story for the curious, but the short of it is that the House had found a way to raise $20 billion over ten years. That was just about what Reid (D-Nev.) needed.
The unemployment extension, along with the billions for business, passed the Senate Wednesday night and, Pelosi said, will pass the House on Thursday.
Pelosi laughed when asked by HuffPost about the pocket-picking. "It just goes to show you've got to get down to that floor right away," she said.
Pelosi, however, had another pay-for ready. Due to some legislative bungling in the past, the paper industry is paid about $8 billion a year by the federal government to add diesel fuel to a paper-making process that does not, in fact, require diesel fuel.
The loophole was exposed by Nation reporter Chris Hayes and has been targeted by House lawmakers, but the paper industry, along with unions representing industry workers, fought back, arguing that rescinding the giveaway would cost jobs. That argument had carried well enough to prevent the closing of the loophole -- that is, until Pelosi found herself in need of the cash.
Here's the legislative summary of the provision that the Senate housed from the House:
Delay implementation of worldwide allocation of interest - In 2004, Congress provided taxpayers with an election to take advantage of a rule for allocating interest expense between United States sources and foreign sources for purposes of determining a taxpayer's foreign tax credit limitation. Although enacted in 2004, this election was not available to taxpayers until taxable years beginning after 2008. Last year, the phase-in of this rule was delayed for two years (for taxable years beginning after 2010). This proposal would delay the phase-in of this rule for an additional seven years (for taxable years beginning after 2017). This proposal is estimated to raise $20 billion over 10 years.
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First Posted: 11- 5-09 12:25 PM | Updated: 11- 5-09 01:22 PM