The House and Senate have now both passed extension bills for the payroll tax holiday. The House bill, however, is superior is several very significant respects, and is far more likely to have a positive economic impact. The House will vote on the Senate version tonight. They should reject it.
They bills differ in several key respects.
The House version is for a full year, whereas the Senate version is for just two months – setting up the same fight again when Congress comes back next year.
The House version phases down extended unemployment benefits in two steps, reaching 59 weeks by midyear, whereas the Senate version continues to pay people for a full 99 weeks not to work. This is a critical difference; as my colleague Adam Berkland and I recently noted, extended unemployment benefits have greatly hindered economic recovery. Republicans were not elected to continue paying people for nearly two years not to work. The House version is a big step in the right direction. The Senate version is continuation of a failed policy.
The House version allows businesses to continue expensing their capital investment, whereas the Senate version would return to slow depreciation schedules. This is the most important pro-growth element of the bill, encouraging capital investment in software, equipment, and other capital goods that boost productivity and encourage economic growth. Depreciation schedules are cumbersome and artificially increase the cost of capital. The current policy of full expensing was a priority of president Obama’s in last year’s negotiations. This policy should at least be extended for a year as the House version would do. Ideally it should be made permanent.
The House version stops the EPA’s Boiler MACT rule, savings hundred of thousands of jobs, where the Senate version allows this rule to stand. This is the smaller of the EPA’s two mercury rules for boilers, with the larger being the Utility MACT rule for power plants expected this week. Both need to be overturned. Mercury is globally circulated and has a vast number of natural sources. U.S. industrial emissions are a miniscule factor; moreover, mercury levels are generally safe other than for pregnant women who eat a large amount of fish, which is of course against doctor’s recommendations anyway. These rules would destroy hundreds of thousands of jobs and drive up consumer prices. The House was right to overturn the Boiler MACT rule in their version and should also overturn Utility MACT.
The House version repeals funding for the so-called “prevention and public health fund,” an $8 billion slush fund. This is an especially pernicious element of the president’s health care law, because the funds – not subject to annual appropriations – are used for public affairs and lobbying campaigns to diminish freedom and consumer choice on the state and local levels. Under this program, our federal tax dollars are being used to lobby for higher taxes on soft drinks, zoning restrictions on fast food restaurants, and advertising campaigns against certain products deemed unhealthful. We’re being forced to pay with our federal tax dollars to limit our freedom locally. That’s wrong. The Senate version leaves this fund intact.
Both bills would extend the current payroll tax holiday and force Obama to decide on the Keystone XL pipeline. Obama, however, may deny the permit by stating the pipeline is not in the national interest “at this time” in an attempt to continuu his strategy of riding the fence past the election to avoid angering the unions who want the jobs building the pipeline or the greens who despise industrial development.
The Senate is trying to force House Republicans to swallow an inferior bill. The House is right to balk. Senate Democrats are now gleefully trying to blame House Republicans for the risk of a final deal not being reached in time to prevent the expiration of the payroll tax holiday hitting millions of Americans with higher taxes. But it was Senate Democrats who wasted months insisting on a series of political grandstanding votes about tax hikes on high income earners and small businesses that were never going anywhere.
The House bill is not perfect, but it’s much better than the Senate bill, which will only prolong this debate two more months before we’re right back where we are now. The Senate should pass the superior House bill.
Phil Kerpen is vice president for policy at Americans for Prosperity and author of "Democracy Denied: How Obama is Ignoring You and Bypassing Congress to Radically Transform America – and How to Stop Him," available at www.DemocracyDenied.org.