Jobs trump the national debt. That’s the message from a robust, bipartisan Senate vote to pass a $140 billion package to encourage job creation and relieve strapped state budgets.
The bill, which passed Wednesday 62 to 36, extends unemployment insurance for jobless Americans through the end of the year, boosts federal support for state Medicaid programs, and blocks mandated cuts in reimbursement for doctors serving Medicare patients.
The measure also extends popular tax breaks for companies that create high-tech jobs, including the research and experimentation tax credit, through the end of 2010.
"Investing in our nation’s small businesses, cutting taxes for America's businesses, and bringing relief to families hard hit by the economic crisis are key to our economic recovery and long-term growth,” said President Obama, in a statement after the vote.
“I am grateful to senators in both parties who took one more step forward today in getting our nation back on a solid economic footing,” he added. Five Republicans joined all but one Democrat, Sen. Ben Nelson of Nebraska, in backing this bill.
The US tax code is riddled with so-called tax extenders, which have an expiration date so Congress can reevaluate their effectiveness. But in fact, they typically pass as a bloc, with little congressional oversight.
“Policymakers have, for the most part, considered the extenders as a group during the enactment process, and have not reviewed the unique strengths and weaknesses of specific provisions,” concludes the Congressional Research Service in a report Monday.
For individuals, these extenders include the deduction of state and local general sales taxes, additional standard deduction for real property taxes, and above-the-line deductions for qualified education expenses.
Relief for businesses includes a $45 million tax break for motor-sports entertainment complexes, $165 million for railroad track maintenance, and special expensing rules for US film and television productions.
The Senate package also renews community assistance provisions, including tax incentives for empowerment zones ($381 million over 10 years) and community renewal tax incentives targeting the District of Columbia, New York City, and the Katrina-battered Gulf Coast. Disaster relief provisions in the package include $2.4 billion for losses related to federally declared disasters. The package also extends the national flood-insurance program until 2011.
In all, the package adds $130 billion to the federal tax deficit over the next year and a half.
“This isn’t a tax extenders bill; it’s a debt extenders bill,” said Sen. Tom Coburn (R) of Oklahoma, in a floor speech before Wednesday’s vote. “If America really needs them, there’s got to be something that’s a lower priority we can eliminate to pay for it.”
But Senate Democrats say that hard economic times demand running up federal spending. "When you're trying to stimulate the economy, you should not be robbing Peter to pay Paul," said Sen. Charles Schumer (D) of New York at a briefing Wednesday.
The House passed its version of tax extenders on Dec. 9, 2009. There may be a need for a conference between House and Senate negotiators to come to terms on what offsets are used to fund the bill.