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Congress shuffles to reach compromise on $1.1tn tax deal before year's end Congress shuffles to reach compromise on $1.1tn tax deal before year's end
(about 1 hour later)
White House and congressional negotiators searched for compromise Thursday on huge tax and spending bills with a combined price tag of well over $1tn, with leaders hoping to clinch agreements and let Congress adjourn next week for the year.White House and congressional negotiators searched for compromise Thursday on huge tax and spending bills with a combined price tag of well over $1tn, with leaders hoping to clinch agreements and let Congress adjourn next week for the year.
“Not everybody gets what they want when you negotiate in divided government,” House speaker Paul Ryan told journalists, a nod toward the tough bargaining so far between President Barack Obama and the GOP-controlled Congress. “But I think we will complete this.”“Not everybody gets what they want when you negotiate in divided government,” House speaker Paul Ryan told journalists, a nod toward the tough bargaining so far between President Barack Obama and the GOP-controlled Congress. “But I think we will complete this.”
On the spending side, lawmakers were seeking a deal on a $1.1tn measure financing federal agencies in 2016. To give negotiators time, the Senate approved a short-term spending bill that lasts until Wednesday; the House was expected to pass it on Friday.On the spending side, lawmakers were seeking a deal on a $1.1tn measure financing federal agencies in 2016. To give negotiators time, the Senate approved a short-term spending bill that lasts until Wednesday; the House was expected to pass it on Friday.
Agreement was close on the numbers, but flashpoints included GOP efforts to weaken Obama’s attempts to reduce air and water pollution, loosen travel restrictions to Cuba, and ease laws regulating the financial industry. With talks continuing and current spending expiring on Saturday, Congress planned to pass legislation on Friday averting a government shutdown, keeping agencies open through next Wednesday.Agreement was close on the numbers, but flashpoints included GOP efforts to weaken Obama’s attempts to reduce air and water pollution, loosen travel restrictions to Cuba, and ease laws regulating the financial industry. With talks continuing and current spending expiring on Saturday, Congress planned to pass legislation on Friday averting a government shutdown, keeping agencies open through next Wednesday.
Negotiators were also hoping to strike a deal on a separate revenue bill that could cost $700bn or more over 10 years by extending dozens of mostly obscure tax cuts. That package could also deliver major political victories for Obama and Ryan.Negotiators were also hoping to strike a deal on a separate revenue bill that could cost $700bn or more over 10 years by extending dozens of mostly obscure tax cuts. That package could also deliver major political victories for Obama and Ryan.
With little more than a year left in office, Obama was hoping an agreement would burnish his legacy by making permanent some expiring tax cuts for millions of families with lower-to middle incomes, younger children and college students. Many congressional Democrats would revel in achieving that, especially with uncertainty about which party will control both ends of Pennsylvania Avenue in 2017. With little more than a year left in office, Obama was hoping an agreement would burnish his legacy by making permanent some expiring tax cuts for millions of families with lower to middle incomes, younger children and college students. Many congressional Democrats would revel in achieving that, especially with uncertainty about which party will control both ends of Pennsylvania Avenue in 2017.
Enactment would mean “one of the strongest anti-poverty efforts in a long time”, said Oregon senator Ron Wyden, top Democrat on the tax-writing Senate finance committee.Enactment would mean “one of the strongest anti-poverty efforts in a long time”, said Oregon senator Ron Wyden, top Democrat on the tax-writing Senate finance committee.
Republicans wanted to make permanent expiring business tax breaks worth perhaps hundreds of billions of dollars. Ryan and GOP lawmakers in the Senate and House would consider that alone to be a victory.Republicans wanted to make permanent expiring business tax breaks worth perhaps hundreds of billions of dollars. Ryan and GOP lawmakers in the Senate and House would consider that alone to be a victory.
“There’s nothing pushing us apart,” House Ways and Means committee chairman Kevin Brady, a Republican in Texas, said of bargainers’ efforts to complete a deal to permanently enact tax cuts that are priorities for both sides. “So let’s stay at that until we get it done.” “There’s nothing pushing us apart,” House ways and means committee chairman Kevin Brady, a Republican in Texas, said of bargainers’ efforts to complete a deal to permanently enact tax cuts that are priorities for both sides. “So let’s stay at that until we get it done.”
Yet for Ryan, accomplishing that would also make one of his top 2016 priorities more affordable – an election-year bill revamping the tax code. Renewing those business tax breaks now would mean he wouldn’t have to include them in next year’s sweeping overhaul, freeing up money Republicans could instead use to help push income tax rates lower.Yet for Ryan, accomplishing that would also make one of his top 2016 priorities more affordable – an election-year bill revamping the tax code. Renewing those business tax breaks now would mean he wouldn’t have to include them in next year’s sweeping overhaul, freeing up money Republicans could instead use to help push income tax rates lower.
But obstacles remained.But obstacles remained.
Around 50 tax breaks for individuals and businesses expire annually, and Congress goes through a once-a-year ritual of renewing them.Around 50 tax breaks for individuals and businesses expire annually, and Congress goes through a once-a-year ritual of renewing them.
The reductions for individuals include breaks for some out-of-pocket expenses by teachers, charitable contributions seniors make from the Individual Retirement Accounts and parking expenses. On the business side, reductions include breaks for some railroad track maintenance, training mine rescue teams, race horses and building energy efficient homes.The reductions for individuals include breaks for some out-of-pocket expenses by teachers, charitable contributions seniors make from the Individual Retirement Accounts and parking expenses. On the business side, reductions include breaks for some railroad track maintenance, training mine rescue teams, race horses and building energy efficient homes.
Obama and Democrats were trying to make permanent tax credits of up to $1,000 per child that go to many lower- and middle-income families; tax credits up to $2,500 for college students; and earned income tax credits for low-income married couples and families with three or more children.Obama and Democrats were trying to make permanent tax credits of up to $1,000 per child that go to many lower- and middle-income families; tax credits up to $2,500 for college students; and earned income tax credits for low-income married couples and families with three or more children.
Unless Congress acts, those tax breaks will become smaller starting in 2018. In one unresolved dispute, House minority leader Nancy Pelosi is pushing for annual inflation increases in the child tax credit, while Republicans wanted steps they said would help prevent fraud, such as requiring recipients to provide social security numbers or other identifying information.Unless Congress acts, those tax breaks will become smaller starting in 2018. In one unresolved dispute, House minority leader Nancy Pelosi is pushing for annual inflation increases in the child tax credit, while Republicans wanted steps they said would help prevent fraud, such as requiring recipients to provide social security numbers or other identifying information.
Republicans want to make permanent the ability of people in states without an income tax to deduct local sales taxes on their federal returns; tax breaks businesses get for research and development costs and for buying new equipment; and some levies on companies doing business overseas.Republicans want to make permanent the ability of people in states without an income tax to deduct local sales taxes on their federal returns; tax breaks businesses get for research and development costs and for buying new equipment; and some levies on companies doing business overseas.
The GOP also wants to end the decades-old ban on US oil exports. Democrats were insisting on trade-offs, including making permanent tax breaks for solar and other alternative energy sources.The GOP also wants to end the decades-old ban on US oil exports. Democrats were insisting on trade-offs, including making permanent tax breaks for solar and other alternative energy sources.
The White House, against the will of some congressional Democrats, was resisting Republican attempts to pare taxes on medical devices and costly health insurance policies enacted under Obama’s 2010 healthcare law to help pay for that overhaul.The White House, against the will of some congressional Democrats, was resisting Republican attempts to pare taxes on medical devices and costly health insurance policies enacted under Obama’s 2010 healthcare law to help pay for that overhaul.