By Walter Alarkon and Kiera McCaffrey - 07/30/09 08:29 PM EDT
Their wish list applies to measures in February’s $787 billion stimulus that were passed to provide a temporary jolt to the economy.
Nearly six months later, these measures have developed entrenched constituencies, and members of both parties are pressing to retain favored priorities. Members are under acute pressure from voters to cushion workers and businesses from the worst recession in decades.
Republican lawmakers have joined some Democrats and business groups like the National Association of Manufacturers in calling for an extension of a tax break expiring at the end of the year that allows businesses to write off losses. That “carryback” provision cost $15 billion in the February stimulus.
Sens. Max Baucus (D-Mont.) and Olympia Snowe (R-Maine) and Rep. Patrick Tiberi (R-Ohio) are pushing legislation to keep that business tax break alive. Tiberi also wants to extend separate expiring tax credits for first-time homeowners and car buyers that cost a combined $8.3 billion.
On the homeowners tax credit, he’ll benefit from the August lobbying campaign planned by the National Association of Realtors. The group wants to extend into 2010 the $8,000 tax credit for new homebuyers, set to expire at the end of November, and also to expand it to all homebuyers.
Several other tax breaks for business are set to expire by the end of the year, including measures that allow small businesses to deduct the cost of capital equipment and write off up to $250,000 in depreciable property, and for senior citizens to access 50 percent more in loans through reverse mortgages.
In total, the separate drives would extend about $88 billion in provisions from the earlier stimulus, though they may not end up in a combined package. It’s also difficult to judge how much the extensions would cost since it is not known how long all of the extended provisions would last. In the case of the unemployment benefits, since more people are now jobless, the cost of extending those benefits would rise.
The first battle will be over extending unemployment benefits, as Rep. Jim McDermott (D-Wash.) and other Democrats on the House Ways and Means Committee already are crafting a bill to extend those benefits for a year. The earlier stimulus added $25 a week to unemployment checks and increased the time workers seeking jobs could receive those checks.
Some Democrats would also extend federal subsidies for healthcare coverage to the unemployed under the COBRA program. The subsidies reduced COBRA premiums by 65 percent, offered coverage to some who weren’t eligible and were set to end in January. They cost nearly $25 billion.
Unions have thrown their support behind the effort, as have Democrats in the Senate, according to Sen. Debbie Stabenow (D-Mich.), a Finance Committee member. She and other Democrats said allowing the enhanced benefits to expire is the wrong thing to do with the nation dealing with an unemployment rate at a 26-year high.
“It does not appear that there is any real hope in sight for new job creation and for jobs for the people that need them perhaps the most,” said Rep. Maxine Waters (D-Calif.), who wants to extend the COBRA benefits as well. “So we’re going to have to do something.”
“There is, right now, no light at the end of the tunnel,” said Kelly Ross, policy analyst for the AFL-CIO. “It’s too early to talk about ending it.”
While extending the unemployment benefits will be controversial with Republicans, the GOP has seen allies in the business community start a hard push to save some of the business tax cuts.
The National Association of Manufacturers has launched a “full-court press” to extend the carryback provision, said Monica McGuire, the chairwoman of a commission at the manufacturing group dedicated to extending the tax break.
The group has issued a flier to member offices urging lawmakers to co-sponsor legislation to extend the credit.
The carryback provision allows businesses to carry back losses to past tax returns, which cuts a company’s tax burden. Businesses see the tax break as important, particularly during tough economic times, because it allows them to free up capital for investments.
Meanwhile, the Realtors plan to visit members in their districts to talk up the extension of the tax credit for new homebuyers.
Rep. Richard Neal (D-Mass.), a senior House Ways and Means Committee member, said that the tax-writing panel will consider extending the carryback credit and other expiring provisions when members return from the recess.
Neal is co-sponsoring Tiberi’s bill extending the carryback tax break. He said he’s also inclined to extend other tax credits.
“It’s working. That’s why you have an uptick in the housing market,” he said.