Club for Growth argues countervailing bill will increase taxes

The House cleared a bill on Tuesday that a conservative group argues will raise taxes. 

The Club for Growth says a bill passed by the lower chamber — sending it President Obama's desk for his signature — amounts to a $160 million tax increase and would need to be offset based on a Congressional Budget Office score.  

The CBO estimates that the bill raises $160 million in revenue over 10 years, and is what Club for Growth deems a tax increase. 

Club for Growth, which had already opposed the bill, sent out a release before the bill passed on Tuesday saying "this should give fiscal conservative serious concerns about the proposal."

The House easily passed the legislation that would give the Commerce Department the authority to continue imposing countervailing duties on imports from non-market economies such as China and Vietnam. 

The upper chamber took the first step, approving the measure by unanimous consent on Monday, restoring the agency's power to set tariffs, about $5 billion worth, on subsidized goods from nations without a domestic market, overturning a U.S. appeals court ruling in December.

But a GOP aide called the score a "quirk" because the CBO uses the court case, which had overturned the ability of Commerce to levy the duties, in the baseline even though the case is not final and under appeal. 

The inclusion provides the impression that passage of the bill is a tax hike, the aide said. 

"The federal circuit affirmed the holding of the Court of International Trade that such countervailing duties could not be collected but did so on different grounds," the CBO estimate said.

"As a result of the federal decision, CBO updated its projection of revenues under current law to reflect the expectation that Commerce will stop imposing countervailing duties on goods imported from non-market economies," according to the estimate. 

"CBO's projection of revenues reflect the expectation that Commerce will continue to impose such duties through fiscal 2012 and then stop imposing such duties in early 2013 in accordance with current law as announced in the federal circuit's decision." 

The legislation grants Commerce the authority that the federal circuit held it does not have under current law. 

Senate Finance Committee Chairman Max Baucus (D-Mont.) and the panel's Subcommittee on International Trade ranking member John Thune (R-S.D.) teamed up on the bill that reinstates the countervailing duties that had been in place since 2007.

They argue that the duties have protected an estimated 80,000 jobs across the country by holding non-market economies responsible for unfairly subsidizing billions of dollars of imports.

Club for Growth had urged lawmakers to oppose the legislation because it "makes it clear that Congress wants to escalate its trade war rhetoric with China." 

But the National Association of Manufacturers came out strongly in favor of the bill on Monday and questioned why any group would oppose it.

"Failure to make it plain that the Commerce Department has this authority would leave manufacturers in the U.S. defenseless against rampant deep pocket Chinese and other government subsidies," said Frank Vargo, vice president of international economic affairs, NAM, in a blog post. 

"Some groups have amazingly has come out against this legislation, saying it restricts economic liberty," he said.