House-Senate dispute derails variety of taxes

A dispute between the Senate and conservative House Democrats has derailed a raft of tax cuts, including extended tax breaks for renewable-energy production, which Democratic lawmakers had hoped would be a signature accomplishment of the 110th Congress.

In addition to incentives for renewable energy, the fight also threatens action on an extension of Alternative Minimum Tax (AMT) relief, mental health parity legislation, and a bill to help rural schools.

{mosads}The failure to reach agreement on extending AMT relief would be the most significant because it could subject millions of American families to higher taxes next year. It remains to be seen whether the House and Senate can agree on a separate AMT measure that would not be offset.

“They had the opportunity to pass these bills, they’ve had them for months and months, and when did they act?” House Majority Leader Steny Hoyer (D-Md.) thundered at a press conference Monday morning.

House Democrats are angry the Senate on Monday gave them a package of tax cuts not offset by tax increases or spending cuts, thereby adding to the budget deficit. Adding insult to injury, the Senate passed along the package when the House is scrambling to recess before Rosh Hashana and is in the midst of a contentious debate over a proposed Wall Street bailout.

“When did they send us something back? Forty-five minutes ago while we are in one of the most important debates we’ve had in this Congress and we are at a time when, in honoring the faith of a lot of members, we must leave at 12:30 [p.m.],” Hoyer said.

Senate Democrats said the tax relief extenders would not pass if they included tax increases to offset their cost because of Senate Republican opposition.

Hoyer and conservative Blue Dog Democrats drew a line in the sand, declaring they would not act on the Senate package because Senate lawmakers made little effort to offset its cost.

But Senate Democrats say that the package they sent to the House is the only one that could pass their chamber, where Democrats hold a slim majority and Republicans can use procedural tactics to block legislation lacking the support of at least 60 senators.

Senate Majority Leader Harry Reid (D-Nev.) denied the accusation of some House Democrats that he is trying to ambush them and pressure them into passing tax cuts without offsets.

"I just beg my House colleagues to understand, this isn’t something that we are trying to surprise them with,” said Reid.

House Democrats on Sunday proposed that the Senate take up separate packages of energy tax relief and business tax relief extensions that would be paid for with offsets and would not add to the deficit, according to a senior aide.

House Democrats proposed adding the mental health parity and the rural schools bill to the package of business tax relief.

But Reid told House Democrats on Monday that the proposal would not pass the Senate because of Republican objections.

“If it were up to me, I would accept this in a second,” said Reid. “I think it’s fine but … I don’t have that ability here. I do not have the strength and the power legislatively, procedurally, that they have in the House.”