Congressional Quarterly
Published: 07-07-08
Senate Minority Leader Mitch McConnell offered a new strategy Thursday for breaking a deadlock over a series of expired and expiring tax provisions.
In a letter to Majority Leader Harry Reid D-Nev. as well as House Speaker Nancy Pelosi D-Calif. McConnell suggested that Congress could offset the cost of the extensions by reducing an increase in non-defense discretionary spending that Democrats have proposed.
That marks a slight shift for Senate Republicans who have blocked consideration of a House-passed tax bill that carries various revenue-raising offsets. The stalemate has frustrated businesses and individuals eager to see their favorite tax provisions continued.
Until now some Senate Republicans have at times insisted that Congress should not have to offset the cost of continuing existing tax policies. House Democrats meanwhile have insisted on offsets to comply with pay-as-you-go budget rules.
In his letter McConnell R-Ky. changed his approach slightly arguing that offsets for extensions of existing tax policy were acceptable as long as they came from spending cuts not new taxes.
“If agreed to extension of expiring tax relief including extension of the AMT alternative minimum tax patch and expiring energy tax incentives could be accomplished in a way that achieves your stated goal of being deficit neutral but without the unstated and unwarranted result of increasing the size of the federal government” he wrote.
Republicans have consistently said that they are willing to offset new tax policies perhaps through some of the revenue-raisers contained in the House bill.
About $21 billion of the provisions in the $57 billion Senate version of the tax extenders package are new policy. If Democrats accept McConnell’s suggestion they would need to cut $36 billion from non-defense discretionary spending over the next 10 years.
