NSPE TODAY: POLICY PERSPECTIVES
Tensions Mount Between House and Senate Over Legislation
BY SARAH OGDEN
The $700 billion Emergency Economic Stabilization Act of 2008 (H.R. 1424) passed Congress and was signed into law on October 3, following a week-long battle that highlighted procedural tension between the House and Senate. The controversial financial bailout package, wildly unpopular with voters, also includes numerous tax provisions that have been a source of conflict between the Senate and House for the past two years.
The disagreement between the House and Senate centers around the deficit: The House and its fiscally conservative Blue Dog Democrats have argued that business and individual tax-break extensions should be fully offset, while Senate Republicans argue against what they see as increasing other taxes to account for extending current tax policies. (Senate Democrats could not muster enough votes to break a Republican filibuster on the issue.)
To overcome opposition in the House—and bucking tradition, which gives the House authority over tax-writing—the Senate passed its own tax legislation, then forced the House to act on the provisions by rolling them into the financial bailout bill. The House reluctantly accepted the Senate's proposal as the price for clearing the bill, but House members have expressed concern over this break in protocol.
The tax portion of the bill, which includes $150.5 billion in total tax breaks and $43.5 billion in offsets over the next 10 years, extends dozens of expired and expiring tax breaks for businesses and individuals; offers incentives for renewable energy; provides relief to individuals and areas affected by natural disasters; and includes a one-year "patch" to the alternative minimum tax to prevent it from reaching an additional 22 million taxpayers.
Three provisions are particularly relevant:
The R&D tax credit received a two-year, seamless extension. The credit offsets 20% of qualifying businesses' research costs that exceed base research costs. Additionally, the alternative simplified credit rate will increase to 14% in 2009, which benefits companies that perform significant amounts of research and development in the U.S. but are unable to claim the regular credit.
Strengthening private investment in research and development is crucial to American competitiveness. NSPE is a member of the R&D Credit Coalition, a group of more than 100 associations and companies that collectively represent millions of American workers engaged in U.S.-based research. In coordination with the coalition, NSPE joined 680 organizations—including the American Council of Engineering Companies and the American Institute of Architects—
in successfully urging Congress to extend the R&D tax credit before adjourning.
Clean energy, a major issue in the presidential campaign, also got a boost. A host of tax provisions to encourage the development of renewable energy and energy conservation were enacted, including:
- Extending credits for producing electricity from renewable sources, increasing emission standards for coal, investing in alternative energy sources, and investing in coal gasification;
- Establishing credits for capturing carbon dioxide for use in enhanced oil or natural gas recovery;
- Extending incentives for energy-efficient commercial buildings, homes, and appliances;
- Establishing new qualified energy conservation bonds for state and local government initiatives to reduce greenhouse emissions;
- Expanding credits for biodiesel and renewable diesel; and
Establishing credits for plug-in
The new law extends the rehabilitation credit for gulf opportunity zone buildings through the end of 2008. The rehabilitation credit offsets costs incurred for the renovation and reconstruction of certain buildings—10% for buildings in service before 1936 and 20% for certified historic structures.
The Senate will return for a lame-duck session the week of November 17, when they will take up a package of public-land bills. The House has neither scheduled nor ruled out a lame-duck session.