Senate Tax Cut Extension Bill Faces House Resistance

House Democrats delivered an ultimatum to the Senate Thursday, saying a stalled package of more than $50 billion in tax breaks for families and businesses won't move unless Congress finds ways to replace lost revenues.

"The extender bill, if it is not paid for, will not pass the House," House Majority Leader Steny Hoyer, D-Md., said at a news conference.

Last month the House, on a 263-160 vote, approved a package that extended tax breaks that have expired or will expire this year. The bill included some $17 billion in tax incentives for renewable energy sources such as wind and solar power. It was paid for by closing several corporate tax breaks.

The tax relief, which included help for education costs, low income families, teachers and businesses doing research, had wide bipartisan support.

But the bill ran into a philosophical logjam in the Senate, where Republicans said it was wrong to compensate tax relief for some by imposing new tax burdens on others.

Last Tuesday Senate Republicans used their filibuster powers to stop Democrats from bringing up a similar bill. Democrats in turn blocked consideration of a Republican proposal to debate a tax break extension bill, including relief for those who could be hit by the alternative minimum tax, without provisions for increasing revenues in other areas.

The House and Senate Democratic bills would have matched the losses to the Treasury by closing a loophole allowing hedge fund managers and other high-income taxpayers to defer taxes through offshore tax havens and delaying a tax break for multinational companies.

A letter to Senate Majority Leader Harry Reid, D-Nev., and Republican leader Mitch McConnell, R-Ky., signed by more than 100 House Democrats, stressed that they were committed to "paygo" rules under which spending increases or tax cuts must be met by equivalent spending cuts or tax increases to avoid making the deficit worse.

"It is increasingly important that we enact legislation extending these tax provisions without increasing the deficit," they wrote.

Reid and other Senate Democrats support the House Democratic approach. But McConnell said it would "sock Americans with a new tax hike. Their latest bill would permanently raise new taxes to temporarily extend expiring ones."

Last year the House finally surrendered to GOP-led Senate insistence that Congress pass unpaid-for legislation, ultimately costing the Treasury more than $50 billion, to shield people from getting hit by the alternative minimum tax.

But the House leaders said it would be different this year. "This time we are going to test their will on extenders," said House Ways and Means Committee Chairman Charley Rangel, D-N.Y.

The House Democrats noted that many businesses were backing the legislation despite the revenue provisions.

Several hundred leading companies wrote Congress recently warning that failure to act quickly "will bring investment in renewable energy and energy efficiency projects to a standstill."

Apple Inc., Boeing Company, General Electric Corporation and Intel Corporation were among those who wrote that "failure to act this summer on tax extender legislation will have significant negative consequences for the U.S. economy."