WASHINGTON -- The GOP-led House of Representatives embraced a former stimulus measure Friday, voting to make it and another related tax cut permanent, adding $287 billion to the deficit over the next 10 years.
The largest part of the cut, worth more than $263 billion, is making permanent so-called bonus depreciation, which allows businesses to write off the cost of capital investments and improvements much more quickly.
It was enacted twice during the administration of President George W. Bush, and the most recent version expired last year. The idea behind it is that if lawmakers give businesses a break during tough economic times, they will speed up major equipment purchases and stimulate economic activity.
Those who support making such a stimulus measure permanent argue that it would give businesses the certainty to be able to plan their investments.
But opponents -- primarily Democrats -- mocked the idea, pointing to Congressional Research Service reports that found the break was a weak stimulus to begin with, and that the stimulative effect is likely to fall even further if the break becomes permanent.
"Even as a stimulus, the analysis shows that for every dollar that is invested we get 20 cents of growth," said Rep. Lloyd Doggett (D-Texas), a member of the Ways and Means Committee. "A fellow could go bankrupt with that kind of economics, and that's exactly what they would have the country doing and not meeting its other needs while funding something that doesn't work."
Doggett and others noted that while Republicans have been adamant about finding ways to pay for other things, from unemployment insurance to the money the federal government needs for its highway funds, they appeared to have no problem with simply tacking the enormous cost of the tax cuts onto the deficit.
"Yesterday, the Ways and Means Committee was working on a markup of legislation for another short-term extension of the highway trust fund -- you know, the transportation infrastructure investment we desperately need in this country," said Rep. Ron Kind (D-Wis.). "We were scratching and clawing to try to find an additional $10 billion over the next 10 months to try to keep some of these projects moving forward, and yet here today, we have another permanent change to the tax code at a cost of $287 billion over the next 10 years and not a nickel of it paid for."
Kind also noted that his committee has passed 14 permanent tax cut bills "so far at a cost of close to $900 billion." With Friday's full house vote, about two-thirds of the committee's cuts have passed.
Democrats also argued that the GOP was being hypocritical for another reason: In the tax reform plan that Republicans floated earlier this year, they ended the practice of bonus depreciation and some related tax cuts.
"You, six months ago, helped produce a package that eliminated this provision, and now you come here and you say you want it permanent," Rep. Sander Levin (D-Mich.), the top Democrat on the Ways and Means Committee, told his Republican colleagues on the committee. "This is acrobatics. This is congressional acrobatics. You are just spinning in an opposite direction, and you're making this place a circus."
Rep. Pat Tiberi (R-Ohio), the sponsor of the cut, dismissed the objections, saying that since bonus depreciation has often been passed on a temporary basis since 2002, also without being paid for, it might as well be made permanent.
"We have had bonus depreciation, this tax policy, temporary, for over 10 years -- unpaid for -- supported by many on the other side of the aisle. Unpaid for," Tiberi said. "Yet moving that policy forward for 10 more years, the same way it's been paid for over 10 years, costs money."
"'Bad policy,'" Tiberi added derisively. "Even though we are giving for the first time certainty, predictability to people who actually create jobs in America, who must have a business plan and must make those big purchases. Amazing."
The White House has threatened to veto the bill, along with the other permanent cuts. The Senate is also weighing the cuts, but is planning only short-term extensions.
Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.
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