House Dem vs. Senate Dem battle heats up as extender bill limps along

Frustration among House Democrats with their Senate counterparts is boiling over.

Finger pointing has been a theme of the 111th Congress, and it is showing no signs of subsiding four and a half months before the elections.

The so-called tax extenders bill the House has repeatedly sent to the Senate for approval — only to be tinkered with, rebuffed or simply ignored — has reignited the intra-party tension.

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“We talk about legislation we need to send over there, and they can’t deal with what’s on their plate,” said House Democratic Caucus Chairman John Larson (Conn.). “I give our Speaker a great deal of credit for her patience, but I don’t think that patience is shared by the majority of our caucus.”

“God bless [Senate Majority Leader] Harry Reid [D-Nev.] in terms of what he has to deal with, but they have a process that’s dysfunctional,” Larson said.

House Democrats are again watching the Senate make major changes to the legislation, which extends several tax and spending measures. Last December the lower chamber sent a similar package to the Senate, but the legislation was given the cold shoulder as Reid and other leaders struggled to pass health reform legislation.

The House last month sent another extender bill to the Senate after weeks of bicameral negotiations that were supposed to ensure the measure’s swift passage in the Senate. But moments after its arrival in the upper chamber, the bill was altered.

While Speaker Nancy Pelosi (D-Calif.) has not lambasted the Senate on the extender bill, some in her caucus have not bitten their tongues.

“They live in a delusional world — they lost their minds,” said Rep. Jim McDermott (D-Wash.).

His chief gripe is with the Senate’s decision to reduce the “doc fix,” a term that describes delaying a cut in Medicare payments to physicians. The House on May 28 passed a fix through 2011 at a cost of $22.9 billion over 10 years. The Senate shaved approximately $16 billion from the provision by shortening the relief to six months, which ensures that Congress will debate the extension of the Medicare reimbursement system before the new year.

“I fail to understand the public policy involved in jerking the medical profession around,” said McDermott, who has worked as a physician and psychiatrist. “They’re just jerking doctors around for no good reason whatsoever.”

Democrats in the Senate say there is a good reason: They need 60 votes, and it’s not easy getting them.

“We understand their frustration,” Jim Manley, a Reid spokesman, told The Hill. “Senate Democrats are frustrated too, but the fact is that we don’t have a Rules Committee over here that we can utilize to jam legislation through.”

The doc fix is the not only provision that got a haircut in the Senate. 

The Senate legislation phases out the $25 per-week increase in unemployment payments. The change cuts roughly $5 billion from the $40 billion extension of unemployment insurance that passed the House.

Senate leaders also softened the tax on investment income deemed “carried interest” when compared to the House.
Carried interest is taxed at capital gains rates, which are much lower than ordinary income tax rates. The House passed a measure that eventually taxes 75 percent of carried interest at ordinary income rates and 25 percent at capital gains rates.

At first, the Senate changed the tax on carried interest to a 65-35 split on assets held for less than seven years. However, failing to garner sufficient support, the measure was reworked so assets held for less than five years would be taxed at a 75-25 split, while assets held for at least five years would be taxed at a 50-50 split.

Senate leaders deem these changes necessary to pass the bill from their chamber. But votes still appear to be lacking unless Reid makes further modifications to the legislation.

The Senate’s changes frustrate House Democrats, who were forced to take a vote on the bill while their concerns went unaddressed.

“Some freshman is going to ask me, ‘Why are you asking me to vote for this when you know that the Senate is not going to?’ And I say, ‘I don’t know why I’m asking you to make that [vote],’ ” Rep. Charles Rangel (D-N.Y.), the former Ways and Means Committee chairman, told The Hill. “The Senate tells me they can only do what they can do, but that changes every day and every hour.”

Rangel argues the Senate rule that 60 out of 100 votes make a majority defies logic and forces leaders in that chamber to run from lawmaker to lawmaker seeking out support to pass anything off its floor.

“Any answer I get today, it’ll be different tomorrow as to which 60 they are talking about,” he said. “So it’s not as though we need Joe’s vote — for reasons which I don’t know. It means it’s Joe today and Sally tomorrow.”

Rep. Bill Pascrell (D-N.J.) argues Senate delays with bills like the extender package cause bicameral action on pressing matters like the estate tax to fall by the wayside.

The tax is currently repealed, but absent congressional action it shoots back up to 55 percent on estates worth over $1 million.

Lawmakers in both chambers want to create a less onerous tax, but drawn-out issues like extenders make it harder to host meetings on the subject.

“This is almost getting like the health bill,” he said, referring to how House Democrats grew tired of the protracted discussions with the Senate.

“I’m fed up!” he said. “I’m 73 years old. I’m stronger and faster than I was 10 years ago, so I don’t get fatigued very easily.”

The Senate is hoping to pass the extenders bill by the weekend to enact the doc fix before the 21 percent cut in Medicare payments to physicians takes effect.

“We’ve cried wolf for the last time. [The 21 percent cut] will go into effect over the weekend,” Reid said. “Everyone on both sides of the aisle should understand the time to sit back and say, ‘We’ll work out something later.’ That time isn’t going to be here. We’ve [got] to do something [Thursday], [Friday] at the latest.”

Reid’s timeline leaves little room for the House to make changes to the bill without jeopardizing the fix for Medicare payments to doctors. Rep. Earl Pomeroy (D-N.D.) told The Hill that forcing legislation through both chambers after months of negotiations just to avoid a deadline on the doc fix likely irritates everyone.

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“I think at this point each chamber is frustrated with the other chamber, and within each chamber there’s plenty of frustration,” he told The Hill. “This has been harder than it should have been.”

Democrats are hoping to pass the tax extender measure by July 4.

Earlier this year, House Democrats provided The Hill with a list of about 300 bills they have passed that are lingering in the Senate.