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Senate passes $140 billion in tax breaks, aid to unemployed

By Ben Pershing
Thursday, March 11, 2010; A04

The Senate approved a $140 billion package of tax breaks and aid to the unemployed Wednesday, the most substantial effort by the chamber to boost the nation's economy since it passed the stimulus bill last year.

Six Republicans joined 56 Democrats to pass the measure, 62 to 36. The package faces an uncertain future in the House, where Democrats have taken a markedly different approach to the "jobs agenda," as current efforts to pass jobs legislation are known, than have their Senate colleagues.

The Senate's action comes as Republicans continue their attacks on Democrats' stewardship of the economy. While President Obama spoke in St. Louis on Wednesday about combating Medicare and Medicaid fraud, the Republican National Committee released a statement pointing to the number of jobs lost in the United States since the health-care debate began a year ago.

Democrats countered that the bipartisan vote Wednesday meant their agenda was on the right track.

"While our Republican colleagues on health care have been stonewall[ing], on jobs they know that they block us at their own political peril . . . and substantive peril as well," said Sen. Charles E. Schumer (D-N.Y.).

Obama said in a statement that he was "grateful to senators in both parties who took one more step forward today in getting our nation back on a solid economic footing."

The Senate measure contains one-year extensions of unemployment benefits and COBRA health insurance, plus extra funding to help states pay for Medicaid. The bill would also help struggling private pension funds and block a scheduled cut in payments to doctors who treat Medicare patients.

Beyond those provisions, the bill carries renewals of several expired tax credits, including those for research and development, biodiesel, energy-efficient home improvements, and the deduction of state and local sales taxes. Those extensions helped attract the support of Republicans and the praise of business groups.

Dorothy Coleman, vice president of tax and domestic economic policy for the National Association of Manufacturers, said the research-and-development credit extension will be a particularly effective job creator. "Going ahead and acting on these [tax extensions] gives companies some certainty" about how they can spend money in the future, she said.

Some experts were less impressed with the stimulative properties of the tax extenders, arguing that aid to the unemployed is far more important.

"The single most important thing you can do is [unemployment benefits] and COBRA, because you're providing money to people you know are going to be spending it," said Lawrence Mishel, president of the left-leaning Economic Policy Institute.

Mishel said that he wouldn't give Congress much credit for creating jobs. "To really move the dial, we're going to have to do much more," he said.

Although Republicans supported many of the bill's individual provisions, critics said that much of the bill's cost would add to the swelling budget deficit.

"Why do we keep doing this?" asked Sen. Judd Gregg (R-N.H.). "Why do we keep passing debt on to our children? Why do we keep running program after program out here that is shrouded in sweetness and light but not paid for?"

In the House, Rep. Sander M. Levin (D-Mich.), the new chairman of the tax-writing Ways and Means Committee, told reporters Tuesday that his chamber may want to go to a formal conference committee to reconcile the two chambers' jobs bills. Creating a conference committee could drag out the process in the Senate for several days, unless Republicans cooperate.

House Democrats have been broadly skeptical of their Senate counterparts' approach to jobs legislation. The House moved a $154 billion package in December that included significant new spending for infrastructure projects, as well as aid to states to prevent layoffs of key personnel such as teachers, police and firefighters.

That funding for local governments is also part of a new jobs package unveiled Wednesday by House Education and Labor Committee Chairman George Miller (D-Calif.). His proposal would give $75 billion directly to states, counties and cities to save or create government and nonprofit jobs.

The Senate hasn't considered similar language, choosing instead to move measures heavy on tax breaks that are viewed unfavorably by many liberals.

Separately, the Senate is expected to vote as soon as this week to send a $15 billion jobs package to the president's desk. That bill -- which would create a Social Security tax break for companies hiring new employees and reauthorize federal highway spending -- has passed the Senate once with bipartisan support. But because the House altered the bill slightly before approving it last week, the Senate will have to take it up once more.

Both chambers are planning in the coming weeks to consider proposals to provide tax breaks and access to credit for small businesses.

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