Fiscal deal winners and losers
The sweeping year-end tax and spending bills unveiled this week in Congress follow months of lobbying by industry and public interest groups and weeks of intense negotiations on Capitol Hill.
The final legislation, at nearly 2,250 pages, is chock full of language representing major victories for some groups and economic sectors and bitter defeats for others.
Here’s a rundown on some of the biggest winners and losers in the $1.8 trillion deal.
The oil industry emerged as a major beneficiary of the spending bill, which lifts a decades-old ban on crude exports. The oil industry has been pushing for about a year and a half to end the ban, a cause championed by Republicans but met with skepticism from many Democrats, environmental groups and the White House.
“Extensive research has determined that lifting the ban on U.S. crude oil exports would create American jobs, bolster the U.S. economy, and benefit consumers,” American Petroleum Institute President Jack Gerard said Wednesday in a letter backing the deal that was sent to congressional leaders Wednesday.
Supporters of ending the ban said that it would allow the U.S. to help allies who want to decrease their dependency on other countries.
“By passing this legislation and lifting the outdated exports ban, American producers will be able to compete on a level playing field with countries like Iran and Russia, delivering energy security to our friends and allies, advancing the energy revolution that has revitalized our economy, and providing meaningful benefits to families and consumers across the United States,” Independent Petroleum Association of America President Barry Russell said.
Labor unions also have something to celebrate in the omnibus. It includes a two-year delay of ObamaCare’s “Cadillac tax” on high-cost health insurance plans. Unions have sought to roll back the tax because they are concerned it would disproportionately affect them. The groups often negotiate larger benefits packages instead of higher wages.
The Cadillac tax would take effect in 2018 under current law and would not apply until 2020 under the spending bill.
Bill Samuel, director of government affairs for the AFL-CIO, said that his group is “relieved” about the delay.
“The tax is beginning to have a negative effect already in bargaining,” he said. Employers are trying to raise costs or reduce benefits for employees, he added.
The renewable energy industry
The nation’s renewable energy producers claimed a significant win by securing extensions of tax credits for wind and solar despite opposition from some Republicans. The solar investment tax credit and the wind production tax credit would be extended and phased out over five years under the spending bill.
“This agreement will enable wind energy to create more affordable, reliable and clean energy for America by providing multi-year predictability as we have called for,” said Tom Kiernan, CEO of the American Wind Energy Association.
Advocates for the extension of the renewable energy credits said that doing so provides certainty for businesses and new jobs.
“By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” said Rhone Resch, president and CEO of the Solar Energy Industries Association.
The legislation extends a slate of corporate tax breaks, representing big victories for business and manufacturing groups.
The tax package indefinitely extends the research and development tax credit, enhanced section 179 small-business expensing and the active-financing exception, and it extends for five years bonus depreciation and the controlled-foreign corporation look-through rule.
Enhanced section 179 and bonus depreciation allow businesses to expense more of their capital investments immediately. The active-financing exception and CFC look-through rule help U.S. companies compete overseas, according to officials with the National Association of Manufacturers.
NAM Vice President of Tax and Domestic Economic Policy Dorothy Coleman said in a news release that the tax package is “a historic and very promising breakthrough.”
“The R&D tax credit, investment incentives for manufacturers of all sizes and provisions that affect U.S. global companies are all key to helping manufacturers innovate, compete in a global marketplace and contribute to U.S. economic growth and job creation,” she said. NAM also praised the two-year suspensions of ObamaCare’s Cadillac and medical-device taxes.
Business Roundtable, which represents chief executive officers, also praised the tax extensions and the freeze of the medical device tax.
“The importance of this agreement, which includes permanent tax extenders, cannot be overstated. We strongly urge immediate action on this package,” said the group’s Tax and Fiscal Policy Committee Chairman Mark Weinberger. “Congress has also wisely proposed delaying the medical device tax. Taxing these devices only increases costs and discourages investment.”
Low and middle-income families
The deal cements expansions of the earned income tax credit and the child tax credit that were created by president Obama’s stimulus law. Keeping them is “a really big deal for working families,” said Steve Taylor, the senior vice president and counsel for public policy at United Way Worldwide.
Robert Greenstein, president of the Center on Budget and Policy Priorities, said that by not rolling back the credits, those programs will keep more children out of poverty than any other federal initiative.
“Making the EITC and CTC improvements permanent would rank among the biggest anti-poverty achievements, outside of health reform, in years. These improvements lift about 16 million people, including about 8 million children, out of poverty or closer to the poverty line each year,” he said in a statement.
E-cigarette, cigar industries
Makers of cigars and electronic cigarettes mounted an aggressive — yet ultimately unsuccessful — bid to include language in the bill they claimed would have saved their industries from being wiped by looming regulations from the Food and Drugs Administration (FDA).
In a proposed rule to assert its authority to over cigars and e-cigarettes, the FDA said any product that hit stores after February 2007 would have to apply retroactively for approval.
Because the review process would cost millions of dollars per product, industry groups were pushing for language in the omnibus spending bill to move that “grandfather date” to the day FDA issues its final rule. Anti-smoking groups panicked in the days leading up to the bill’s release, fearing the industry groups had been successful.
Wednesday morning, the American Lung Association, the Campaign for Tobacco-Free Kids and others breathed a sigh of relief.
“By rejecting these special interest giveaways to the tobacco industry, this agreement bolsters the nation’s fight against tobacco use, the number one cause of preventable death,” Matthew Myers, the campaign’s president said in a statement.
Financial reform advocates were hoping the Obama administration would finalize two new rules in 2016 that shed light on the “dark money” that corporations and certain nonprofit organizations pour into political campaigns. The final legislation includes measures to block both.
Language in the spending bill prevents the Securities and Exchange Commission from issuing a rule requiring publicly traded companies to disclose their political spending and the IRS from defining the activity that’s allowed by 501(c)(4) groups.
The financial sector also struck out. Wall Street fell short in its efforts to ease rules under the 2010 Dodd-Frank financial reform law and delay the Labor Department’s “fiduciary rule,” which would force retirement investment advisers to act solely to the benefit of their clients.
Opponents of mandatory labeling laws for foods that contain genetically modified organisms (GMOs) were handed a blow with language that forces producers to develop guidelines and implement a program for the mandatory labeling of genetically engineered salmon.
At the same time, the Grocery Manufacturers Association, one of the biggest proponents of GMO products, was disappointed to learn that the bill did nothing to block states from issuing their own mandatory labeling laws.
The group’s president and CEO, Pamela Bailey, said genetic engineering can help combat hunger around the world and should not be stigmatized. She urged Agriculture Secretary Tom Vilsack to help the parties on both sides of the issue forge a compromise that Congress can pass in the new year.
Greens also found themselves on the short end of the stick, with riders that lift the oil export ban, limit restrictions on overseas coal financing and block endangered species protections for the greater sage grouse — though the Fish and Wildlife Service ruled in September that an endangered listing wasn’t warranted.
Lukas Ross, a climate and energy campaigner for the group Friends of the Earth, called the proposal “toxic.”
“Polluters and their champions in Congress are using the budget process to launch an assault on decades of bedrock environmental law,” he said. “This is the wrong choice for clean air and a livable climate.”
Ross went on to say that lawmakers should not have to barter away basic environmental protections to fund the government.
“Riders on everything from international coal finance to the crude oil export ban simply have no place in a spending bill,” he said.