The Senate is planning to add its tax bill — which includes the extension of renewable-energy tax credits — to the $700 billion bailout package it will be voting on tonight.
The addition is intended to “sweeten” the deal in hopes of gathering more votes and ensuring passage of the bailout package. The Senate has also added to the package an increase to the maximum amount the Federal Deposit Insurance Corp. will insure on individual bank accounts, from $100,000 to $250,000.
The tax bill, which includes $17 billion in tax credits for renewables, passed by a vote of 93-2 in the Senate last week. But the House then passed a different version of the bill, which Senate Majority Leader Harry Reid (D-Nev.) said he didn’t think could pass in the Senate.
The sticking point is whether the bill should include mechanisms for funding all of the tax breaks. In the Senate bill, the energy credits are paid for by freezing a tax break for oil and gas companies at the current rate and tightening the rules on taxes that oil and gas companies pay on income earned overseas, but some of the other tax credits aren’t fully funded. Moderate or “Blue Dog” Democrats in the House have insisted upon offsetting the costs fully. The House version of the bill includes additional methods to fund the tax credits, and also strips out tax incentives for oil shale, tar sands, and coal-to-liquid fuels.
Adding the Senate’s version of the tax bill to the bailout package is likely to annoy those House moderates. At least 24 of the 44 Blue Dogs who voted for the bailout have opposed passing the tax package without complete “pay-fors,” or provisions to pay for tax credits. The addition of the “sweeteners” might help pick up more Republicans, however, which leaders hope can negate any losses on the Democratic side.
A coalition of 680 businesses, environmental organizations, public health advocates, electric utilities, agricultural organizations, investors, labor groups, nongovernmental organizations, states, and trade associations sent a letter [PDF] to House and Senate leaders today urging them to pass the tax extensions for renewable energy before closing up shop for the year.
“At risk with the possible failure of the extenders package are hundreds of thousands of jobs, billions of dollars in clean energy investment, crucial incentives for research and development, and a range of popular programs,” the groups wrote in the letter. “We respectfully urge that Congress not leave for the election recess until a final agreement has been reached on the vitally important tax extender package.”
The Senate is slated to vote this evening on the bailout package, and a House vote is likely to follow tomorrow.