GOP blocks action on tax, renewable energy package

For the fourth time this summer Republicans stopped the Senate from taking up wide-ranging legislation that extends tax breaks for teachers, businesses and parents and provides tax credits to an array of renewable energy entrepreneurs.

Major business groups, usual GOP allies, have implored Congress to act on the tax credits, many which expired at the end of last year or will run out at the end of this year. But for many Republicans, it's a matter or principle and politics: many oppose what they say are new tax increases to pay for parts of the package and nearly all say the Senate's only business now is acting on an energy bill that promotes drilling and other measures to boost domestic oil supply.

The White House, citing new taxes and other objections to the bill, threatened a presidential veto.

The vote Wednesday was 51-43, nine short of the 60 needed to begin floor debate.

"All the Republicans want to do is not pay for anything and we know the House would not accept that," said Senate Majority Leader Harry Reid, D-Nev., anticipating the defeat.

But Sen. John Cornyn, R-Texas, said his party sees a "need to dispose of the pending energy bill to help bring down the price of gas at the pump before turning to other matters."

The bill would extend some $18 billion worth of renewable energy tax credits, helping out investors in wind and solar power, clean coal, plug-in electric vehicles and a variety of others.

Last month more than 300 high-tech and manufacturing companies warned Congress that failure to act quickly "will bring investment in renewable energy and energy efficiency projects to a standstill."

Greg Wetstone of the American Wind Energy Association said Tuesday that his industry risks losing $11 billion in investment and 75,000 jobs if the tax credit expires next year.

The bill also would extend the research and development tax credit that expired last December, and would revive tax credits for the deduction of state and local general sales taxes, higher education tuition and teacher expenses.

It includes a one-year fix for the alternative minimum tax that is supposed to only affect the very wealthy but could hit some 25 million taxpayers unless Congress takes preventive action.

To attract more Republicans, Senate Finance Committee Chairman Max Baucus, D-Mont., added new provisions to this version to give tax breaks to those hit by natural disasters in the Midwest and elsewhere and to require private insurance plans to offer mental health benefits equal to other medical benefits under their coverage.

The bill also adds $8 billion to the federal highway trust fund to make up for an anticipated shortfall next year that could stop new infrastructure projects and result in the loss of hundreds of thousands of jobs.

Baucus also removed a tax break in previous versions of the legislation that assisted trial lawyers - a provision Republicans disliked, and took out Davis-Bacon wage requirements for federal projects that Republicans generally object to. This long-standing law requires that wages paid to people doing federal contract work be equal to the prevailing wage in the area where the work is done.

The Baucus package would cover the cost of the tax breaks by raising some $54 billion over 10 years by preventing hedge fund managers and others from deferring certain overseas profits and by delaying a tax break for multinational corporations.

There is no offset for fixing the alternative minimum tax, which will cost the Treasury $61.2 billion over 10 years.

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The bill is S. 3335

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