Virus Relief Bill Passed: Stuffed with Special Interest Breaks as Thanks for PAC Money Support

 

The real controllers of government policy

(For decades & both sides are guilty)

Troubling story from the Washington Post regarding the recently passed virus relief bill with this headline their excellent analysis:

“Tucked in the massive stimulus bill is billions in special-interest tax giveaways”

Short Introduction: This new virus relief new bill includes emergency economic relief, government funding, and tax cuts into one huge bundle. The economic relief component of the bill is worth around $900 billion.

The legislation included a slew of provisions that had nothing to do with coronavirus relief or funding the government, including many of the tax extenders.

Main Story: Congress unveiled a 5,593-page spending bill and then voted on it several hours later, with lawmakers claiming urgent action was needed to rescue an ailing economy ravaged by the coronavirus pandemic.

Also tucked in the bill was over $110 billion in tax breaks that strayed far from the way the bill was marketed to many Americans.

These giveaways include: (1) big tax cuts for liquor producers, (2) the motorsports entertainment sector, and (3) manufacturers of electric motorcycles.

These measures, added onto the broader spending bill, are known as “tax extenders” — tax breaks targeted at specific, sometimes niche industries.

Routinely extending these “temporary measures” has become something of a year-end tradition, despite loud complaints from some lawmakers who allege the votes largely benefit special-interest groups who stand to gain financially from the outcome.

These “tax extenders” are designed to be temporary but are frequently renewed, often at the urging of industry lobbyists, and done so during late-night votes at the end of the year.

NOTE: The Senate vote took place shortly before midnight.

The Joint Committee on Taxation estimated the extenders benefiting industry and special interests included in the stimulus bill would cost over $110 billion over 10 years.

How the stimulus deal came together:

Tax experts and good governance advocates have criticized such short-term tax relief extensions, arguing they hide the true cost of the cuts and advantage industries with the most well-connected lobbyists.

Howard Gleckman, a tax policy expert at the Urban Institute, said in an email: “They are a gravy train for members and lobbyists, who repeat the same exercise every year or two. The lobbyists get to keep billing hours. The members get campaign money from the same people. Many of these are classic special interest tax breaks that do not benefit the overall economy in any way.”

The federal government collected $3.4 trillion in taxes in the 12 months that ended September 30, but it typically allows more than $1.5 trillion in annual tax breaks, according to the Committee for a Responsible Federal Budget.

Some of these are locked into the tax code. Others, however, were initially designed to last only a year or two but continue winning extension after extension because of intense lobbying.

One measure, for instance, makes permanent a cut in excise taxes for producers of beer, wine, and distilled spirits which first became law in 2017 as part of the Republican-led tax cut package. The cuts were due to expire without congressional action,

Then the alcohol industry pushed hard for their renewal, arguing that their businesses had been decimated by the pandemic. The industry has supporters among both Democrats and Republicans in Congress, who in turn pushed their leaders to include in the bill making the cuts they wanted permanent. Anheuser-Busch, the Distilled Spirits Council, Bacardi North America, and the Brewers Association all lobbied Congress in recent months on the excise tax issue.

Ironically, Sen. Ron Wyden (D-OR) who wrote that law loophole said in an interview: “I wrote this law for one purpose: to help small brewers and wineries and everybody in this space because the rules, the regulations, and the taxes were practically from Prohibition.”

That excise tax cut won praise in some corners, for example:

An analysis by the Progressive Policy Institute recently published an argument that says the cut helped fuel an expansion in brewery employment, a rare bright spot amid overall U.S. manufacturing decline.

Another extension, of a tax credit aimed at helping the wind industry, sparked impassioned speeches Monday night as the Senate debated the bill. 

For example:

Sen. John Hoeven (R-ND) introduced an amendment to strip the credit from the bill and was backed by GOP colleagues Sen. Kevin Cramer (R-NC) and Sen. James Lankford of (R-OK). They both argued that those credits benefit a mature industry that doesn’t need the extra help, and that its benefits and harms had not been fully debated by lawmakers. Lankford said the wind production tax credit was a “zombie that legislators had agreed years ago should be ended, only for it to be resurrected by lobbyists.”

Cramer called the credit a “Market-destroying atrocity, and called for an end to all tax extenders. Let them all expire. K Street wouldn’t like it, but it would be one less section in this giant package.”

The American Wind Energy Association VP for Federal affairs, Bree Raum, pushed back on the criticism, saying: “We are surprised that wind energy was singled out amid a federal tax landscape that currently includes support for all types of energy sources. Wind energy provides significant economic benefits to America’s heartland, and ND and OK generate over a quarter of their electricity from this clean energy resource.”

Sen. Hoeven’s amendment failed passage.

Another “tax extender” benefits the motorsports entertainment industry, such as NASCAR, by allowing for the faster write-down of costs related to their complexes. That provision, which has appeared in prior legislation going back to 2004, helps those companies lower their overall tax bills and has now been extended until 2025. 

A spokesman for NASCAR, which has lobbied Congress on the extension, did not respond to a request for comment.

Another tax extender grants a tax credit to buyers of “two-wheeled plug-in electric vehicles” (electric motorcycles). That credit is worth 10 percent of the cost of the motorcycle, up to $2,500. Manufacturers of the bikes, such Energica and Zero advertised the tax credit on their websites.

President-elect Joe Biden has been critical of the plethora of tax giveaways, but he will find that both Democrats and Republicans have been steadfast in their supportive of certain tax breaks. And to win passage each year, the tax breaks are bundled together into one package for votes to draw maximum support, and thus this new virus emergency relief bill now includes that $110 billion worth of goodies for corporate America as outlined above.

My 2 cents: This article address several critical issues, #1 being these special interest lobbying tactics stuck into key bills like this one. That issue has been around for a very long time – in both parties.

Now is the time to change that mindset and rules for giving in so easily to Lobbyist and their shenanigans to get the bills they want – not what the public necessarily needs.

This issue as always before should be a prime election … some lobbying may be worthwhile, but not in all cases and certainly not in this case stacking this virus relief bill with corporate goodies.

My nickname for this stuff is: “You scratch our backs, we pad your reelection coffers.”

Thanks for stopping by.