House Dems to pitch revised AMT patch

House Democrats moved toward a collision with the Senate Wednesday, as House Majority Leader Steny Hoyer (D-Md.) vowed to do “everything in my power” to extend relief from the Alternative Minimum Tax (AMT) without violating his party’s pay-as-you-go budget rules.

At press time, House Democrats were poised to approve for the second time a one-year patch to the AMT that is fully offset with tax increases, in a move that seemed designed to draw a contrast with Republicans on their commitment to exercise budget discipline and to appease fiscally conservative members of their caucus. The bill was expected to pass the House late Wednesday.

{mosads}“We are fighting for principle — and for this nation’s future. We are not giving up.  Passing an AMT bill that is not paid for is not a fait accompli,” Hoyer told reporters earlier in the day.

The legislation faces slim odds in the Senate, which passed its own “clean” AMT patch last week after Republicans blocked numerous Democratic attempts to attach “pay-fors” to the legislation. The White House further emboldened Republicans to stand firm on Wednesday by issuing a veto threat on the House bill.  

Hoyer made his pledge to adhere to pay-go while standing alongside members of the Blue Dog Coalition, some of the most fiscally conservative Democrats, who also seemed to have received assurances from House Speaker Nancy Pelosi (D-Calif.).

“We have no doubt that she will continue to oppose bringing any bill to the floor that’s not paid for,” said the Blue Dogs’ co-chairman for communications, Mike Ross (D-Ark.).

But Hoyer retreated from his previous resolve later in the day when he refused to tell reporters what he would do if the new House AMT bill fails in the Senate.

 “We’ll have to cross that bridge when we come to it. We’re hopeful that the Senate will act fiscally responsibly,” he said.

He later signaled to reporters that he recognized that a fully offset AMT patch would have an uphill fight getting signed into law: “My experience with the president is that he doesn’t abide by pay-fors.”

It is unclear whether Senate Majority Leader Harry Reid (D-Nev.) will take up the House bill. Senate Democrats are philosophically in agreement with the House leaders, and strongly prefer to comply with pay-go on AMT.

Yet they have their hands tied as Senate Republicans have the power to throw up procedural hurdles to any legislation they oppose, and they say they are adamantly against attaching any taxes increases to the AMT patch.

Since the House did not amend the Senate-passed AMT patch, but created entirely new legislation, Senate Democrats may more easily decline to take it up.

Democrats are also feeling increased pressure to pass a final bill soon, as wrangling over the AMT is raising the chances of a tax-filing fiasco.

 On Thursday, the ranking member on the Senate Finance Committee, Chuck Grassley (R-Iowa), ratcheted up the pressure on Democrats by requesting that the Government Accountability Office investigate the impact of the delay in enacting an AMT patch on the 2008 filing season.

With their new legislation, House leaders say they are testing whether they can peel away any Republican votes in the Senate. Compared with the AMT patch the House passed last month, the new bill contains offsets that, on the whole, are less controversial in the Senate.

However, Senate Republicans have said repeatedly that they will not accept an AMT with offsets attached, arguing that new tax increases should not be used to pay for the extension of existing relief.

“The Senate will not pass a short-term fix for some if it includes a permanent, massive tax hike for others,” Don Stewart, spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), said.

In a strategy session of House and Senate GOP leaders and members of the business lobby on Tuesday, there was broad agreement that Republicans would easily hold their rank and file together if the House legislation came up for another vote.

“My sense is that Republicans in the Senate will not accept the House version with the offsets in it,” said Jade West, a lobbyist for the National Association of Wholesale-Distributors who was present at the meeting.

Meanwhile, the Blue Dogs are raising the stakes for the Democratic leaders.

“We’re different [than Republicans]. And this week’s going to demonstrate who we are as Democrats,” Ross told reporters.

Asked how the Blue Dogs would respond if the leaders back down on their pledge, Ross responded, “That will define the difference between us and the rest of the party.”

Jonathan E. Kaplan contributed to this report.