Centrist senators express doubts on tax break extenders vote

Centrist senators in both parties remained skeptical of legislation extending several tax breaks ahead of a key Wednesday vote.

Sen. Ben Nelson (D-Neb.) reiterated his concern to reporters on Tuesday that he could not support the $140 billion proposal, known as the tax extenders bill, because it adds roughly $108 billion to the deficit.

"Borrowing and deficit spending at the point of a crisis is one thing, but when you're in recovery, borrowing and deficit spending is another thing," he said. "Borrowing during a recovery is risky because it may slow down the recovery."

Democrats have cast the spending as "emergency spending" that does not have to be offset with other spending cuts or tax increases. But Nelson said he does not consider an extension of unemployment insurance and Medicaid aid to states, both included in the bill, to be emergency spending.

"[Emergency spending] has to be outside [our] control," said Nelson, who gave flood assistance as an example of an emergency expenditure that Congress could not have prepared for. Members were well aware that unemployment insurance and Medicaid assistance were set to expire, he said.

"If everything is an emergency then nothing is," Nelson said, adding that other members in his caucus are equally troubled that the bill would add to the deficit.

Senate Majority Leader Harry Reid (D-Nev.) filed cloture on the legislation on Monday, setting up a Wednesday vote. Reid will need 60 votes to win the procedural vote, meaning at least one Republican would have to cross party lines.

Sen. Olympia Snowe (R-Maine) is also concerned by the bill's borrowing, and recommended that Democratic leaders strike the Medicare "doc fix" from the legislation and pay for its extension with unused stimulus funds. 

But deficit spending isn't the only thing bothering lawmakers about the bill. 

Sen. Debbie Stabenow (D-Mich.) is concerned that tax writers are looking to pare back the payroll tax on S corporations by possibly exempting retained earnings from the levy. 

Senate Finance Chairman Max Baucus (D-Mont.) said the provision is being reworked, but did not provide any details on possible changes to the tax. 

"We're talking to senators; we're talking to staff and Joint Tax [Committee] to make it fair," Baucus said. "We're trying to close a loophole to stop the abuse. We're doing it the way that's fair." 

Baucus did not comment on whether he thought applying a payroll tax to retained earnings of S corporations was fair. 

"If it's an abuse it should be stopped," he said. 

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