Snow's concerns won't hamper tax bill, lobbyists say

Treasury Secretary John Snow’s concerns about the corporate tax bill, voiced in a letter yesterday to lawmakers, will not hamper progress on the bill, Hill sources and lobbyists said.

The bill’s most troublesome stumbling blocks are still the two tobacco provisions — a tobacco buyout for farmers and a measure that would give the Food and Drug Administration (FDA) the authority to regulate tobacco, they said.
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Backers of the tax bill say points made Treasury Secretary John Snow in a letter won’t push a vote on the bill to after the elections.

The corporate tax bill repeals the foreign sales corporation/extraterritorial income exclusion tax breaks, which have been ruled illegal trade subsidies by the World Trade Organization (WTO).

While the administration has said that Congress should repeal the tax breaks and comply with the WTO ruling, it has remained largely silent on the details of a repeal. The administration’s lack of input was at times frustrating to lawmakers and lobbyists who said that stronger leadership from the executive branch could hasten action on the bill.

Last night, the administration at last spoke on the bill. Yet while Snow praised Congress’s effort to move forward, he wrote at length about provisions in either the Senate or House version of the bill that the administration opposed, prompting some observers to suggest that the letter was an attempt to slow progress and push a vote on the bill to after the November elections.

But backers of the tax bill pointed out that many of the points Snow raised — that the bill have no net cost, that the so-called “haircut” provision dealing with overseas income not be included, that a tobacco buyout be fully offset — had already been resolved in his favor in the proceedings of the conference committee last night.

The remaining concerns — about a “repatriation” measure and “a myriad of special interest tax provisions” — would not be enough to signal strong administration disapproval, backers of the bill say.

President Bush has faced a number of attacks — most recently this Sunday in Austintown, Ohio — from his opponent, Sen. John Kerry, charging that Bush provides tax breaks to U.S. companies with overseas operations, which spur the movement of jobs abroad. Several new tax benefits for such companies are part of the corporate tax bill, which has led many to suggest that Bush would be reluctant to sign such a bill so close to the election.

Yet what concerns the bill’s champions more is a looming filibuster in the Senate should the conferees neglect to include the FDA provision, which enjoys strong backing from Senate Democrats and some Republicans.

Sen. Edward Kennedy (D-Mass.) planned at press time to offer three amendments in conference yesterday that would either add the FDA measure to the bill or strike the tobacco buyout. Should the amendments fail and the bill emerge from conference without the FDA language, it is widely expected that Kennedy will filibuster, complicating passage of the corporate tax bill in the Senate.

Both the House and Senate are aiming to adjourn Friday so that members can return to their districts to campaign. A filibuster could complicate their efforts to adjourn.

Meanwhile, public-health groups are pressing hard to get the FDA language included in the conference report or to strip the buyout, which, if it does not move in this bill, could serve as a future vehicle for the FDA provisions. The Campaign for Tobacco-Free Kids released numbers yesterday showing that the current tobacco buyout would pay less to farmers than a version previously under consideration would have. North Carolina tobacco farmers would receive $796 million less. Kentucky farmers would get $490 million less.

Those numbers could sour some tobacco-state members’ support for the bill if it seems as though they are negotiating an inferior deal for their farmers.

North Carolina Rep. Richard Burr (R) is in a particularly tricky spot. In a neck-and-neck race for the Senate with former Clinton White House Chief of Staff Erskine Bowles (D), much of Bush’s support hinges on whether he can provide a tobacco buyout for North Carolina farmers before the election. He has been named a conferee on the tax bill, further intertwining the success of his campaign with the survival or demise of the buyout.