The legislation has been fiercely criticized by budget watchdogs, liberal advocacy groups and the Bush administration, all of which have decried it as a grab bag of special-interest measures that would further complicate the tax code and increase the budget deficit.
"This is a very cynical conclusion to this Congress," said the nonpartisan Concord Coalition's executive director, Robert L. Bixby, who suggested that the money raised by closing tax loopholes would be better used to reduce the federal deficit, or to underwrite broader provisions like the middle-class tax cuts President Bush signed this week. The WTO ruling against the export subsidy was "a legitimate problem they needed to address, and they used that legitimate problem to drag all these goodies over the finish line," Bixby said.
Advocates said the compromise reached yesterday will provide timely tax relief for companies that have been slow to hire new workers. "The conference report will end [E.U.] sanctions on U.S. products and provide tax relief to America's job creators," said Rep. Bill Thomas (R-Calif.).
But E.U. spokesman Anthony Gooch strongly hinted that the legislation may not even accomplish its central goal: lifting the European sanctions. The export subsidy phases out of existence slowly when it should be lifted immediately, he said, and a developing trade dispute over subsidies to aircraft manufacturers Boeing Co. and Airbus SAS could complicate any move to lift the penalties.
The most vociferous criticism has centered on the $10 billion buyout of tobacco growers. Some lawmakers complained that the legislation upends a delicate congressional compromise linking the buyout to a measure granting the Food and Drug Administration authority to regulate tobacco. Though the buyout was approved by the conference committee, the stiffer regulation of tobacco was not -- which the American Lung Association decried as "unconscionable." Sen. Mike DeWine (R-Ohio) had threatened a filibuster if the FDA provision was excluded, but that prospect appeared to dim yesterday.
Republican and Democratic lawmakers and tax aides said the final bill would help such a broad variety of businesses, it will win congressional approval. Business and manufacturing groups are pushing hard for final passage so exporters can be relieved of the mounting E.U. sanctions, which are now 12 percent. Western lawmakers touted the bill's benefits for oil and gas drillers. Tobacco-state lawmakers crowed about the buyout for farmers.
"This is a good deal for our tobacco farmers and a historic time for Kentucky agriculture," said Sen. Jim Bunning (R-Ky.).
Politicians from states without income taxes, especially Texans, praised the two-year measure allowing their constituents to deduct their sales taxes on their federal return, a provision championed by House Majority Leader Tom DeLay (R-Texas). "This is a huge economic boost for Texas," said Rep. Kevin Brady (R-Texas).
Democratic tax aides said Senate Minority Leader Thomas A. Daschle (D-S.D.) was won over by lucrative agriculture provisions, especially tax benefits for ethanol producers. "There are a lot of things in this bill that are very popular with senators of both parties," said Senate Majority Whip Mitch McConnell (R-Ky.). "Killing the conference report over the fact that something isn't in it is highly unlikely."
