And those two indulgences are just a drop in the bucket.
The US senate is taking up a package mostly consisting of temporary business tax breaks, which it intends to pass without finding other revenues or cutting spending. That will mean the country borrows $86 billion more than it otherwise would over the next decade, increasing the forecast deficit 5% this year and 25% in 2015. It may be one of the only things lawmakers do in 2014.
Who cares? Well, if you don’t like the idea of multinationals like Apple and Caterpillar shifting profits abroad to avoid taxes or of huge discounts for corporate jets coming out of the public pocket, or of racehorse owners and “motorsports entertainment complexes” getting special privileges, you might care. This deal enshrines all those breaks.
And it is likely to pass because it also includes policies that most people find unobjectionable: A tax credit for research and development is by far the most expensive and sensible part of the package. Another pricey item would make sure that distressed homeowners who have excess mortgage debt forgiven aren’t asked to pay taxes on the relief, which would undermine the very purpose of forgiving the debt. Another provision would give tax breaks to businesses who hire the long-term unemployed.
In fact, there’s something for everybody in the bill, and that’s sort of the point: There are enough benefits to go around to camouflage the more cynical elements. Tax breaks for renewable energy plants will attract climate-change-nervous Democrats; biodiesel incentives will win plaudits from representatives in the mid-west; and businesses from restaurants to factories want to keep depreciation schedules set during the recession that let them write off capital expenses faster than usual.
The “tax extenders,” as the package of oft-renewed temporary breaks are known, will be a political bone of contention all summer: Observers don’t expect Congress to vote for their final package until after the November elections. The result is a three-way struggle between House Republicans, who want separate votes on whether each break should be made permanent without making up the lost revenue; Senate Democrats, who want to pass the extenders without paying for them one last time—their bill is called the EXPIRE Act—before a thorough tax reform ends future uncertainty; and president Barack Obama, who has caught himself in the middle insisting that any tax cuts be paid for.
Who will win this particular horse race? Business lobbyists, mainly: They’ll collect hefty paychecks when the extenders package becomes law, as most in the capitol expect, and then collect again when the fight over the temporary breaks resurfaces in the years to come.