RENEWABLE ENERGY AND JOB CREATION ACT OF 2008 -- (Senate - September 23, 2008)
BREAK IN TRANSCRIPT
Mr. GRASSLEY. Madam President, I am pleased that we are finally discussing legislation that is designed to deal with time-sensitive tax matters. I thank Chairman Baucus for his cooperation in working in a bipartisan way on this legislation.
There are five categories of time-sensitive tax matters. These are things that are sunset. For those in the public who don't recognize the word ``sunset,'' at certain times, legislation comes to an end and must be reenacted. That is called sunset.
The first category of this sunset legislation is the alternative minimum tax fix. It expired on December 31 of last year. If we don't act, 24 million families will face an average tax increase of at least $2,000 each.
The second category of tax relief includes several tax benefits available to middle-income taxpayers. These expired also December 31 of last year. Included are deductions for out-of-pocket expenses for teachers who buy supplies for their classrooms, sales tax in various States that have a sales tax but not income tax, and college tuition for middle-income families. Millions of taxpaying families would face an unexpected tax increase if this sunset legislation is not reenacted.
The third category in the bill consists of many valuable business incentives, such as the research and development tax credit that has likewise expired and has put corporations in a position of not doing research and development or maybe wondering whether the tax incentives are going to be available to them.
This will reenact incentives such as that.
In this time of high oil prices and instability in the energy market, Congress should send a clear signal in support of alternative energy and conservation. This very important issue is dealt with in the fourth category in this bill. We will be considering that issue today to send a strong signal in support of alternative and renewable energy, as well as conservation. We will not let the wide assortments of tax incentives for alternative energy and conservation expire this year, which would otherwise happen.
The fifth and final category deals with the disasters that have ravaged the Nation's heartland, especially my State of Iowa and, of course, most recently the gulf coast, particularly along Galveston. We need to respond to help these folks in these regions, and these tax incentives are meant to help both business rehabilitation, as well as individual rehabilitation.
I believe this legislation is must-do business. Congress cannot dawdle any longer. And with a sense of emergency and urgency, Senator Reid and Senator McConnell, the leaders of the Senate, have devised a path for the Senate to complete action on these provisions. I would rather have processed this legislation over a period of time. Several months ago would have been a better time to process this sensitive business. Better late than never, and this is late, and better to do it now than not to get the job done at all.
Our leaders provided Chairman Baucus and me with the authority to do a compromise. That, of course, was a critical step. I am glad our leaders were able to get together on that point. So Chairman Baucus and I pulled out our note pads and resharpened our pencils and, of course, here we are with this bipartisan compromise.
I am confident that the Senate will approve the first and third amendments that will be before the Senate. The first amendment will deal with the fully offset energy tax incentives package that I will deal with in some detail in a minute. The third amendment will contain a bipartisan compromise on the alternative minimum tax fix and, of course, these business extenders to which I have referred.
In between those two bipartisan amendments will be an amendment to be offered by Senator Reid for the Democratic caucus. All amendments will face a 60-vote threshold.
Last year, I laid out the principles Senate Republicans would follow when it came to revenue raisers, and those principles are still in effect, somewhat modified by the bill before us. But the basic rationale behind the Senate Republicans on revenue raisers is still there.
The first principle I laid out is whether the proposal is good tax policy. If the proposal is good tax policy, then we would support, and vice versa, not support if it is bad tax policy.
The compromise before us meets fully the needs of all Republicans on this point that the principles of this bill are good tax policy.
The crackdown on offshore deferred compensation plans is appropriate tax policy. I am pleased we made it tougher on hedge fund managers by removing a charitable loophole. Likewise, the offsets in the energy portion of the bill are appropriate policy.
The second principle I laid out last year deals with how revenue raisers are accounted for. This is where our two parties differ. How do the two caucuses differ? Republicans do not want to go down the slippery slope of building in a bias toward automatic tax increases--I should say almost automatic tax increases--and against current law tax relief. This is especially compelling when appropriations are wholly outside the Democratic version of their pay-as-you-go principle.
Let me explain that we find it in our Republican caucus inconsistent that Democrats would say, when you are going to continue existing tax policy, you need to raise taxes on other Americans to pay for it. We believe existing tax policy should be continued without offset.
The inconsistency for us comes from the Democratic point of view that if you want more spending in appropriations bills, you don't have to pay for it. We find that highly inconsistent.
Also, I could say that expiring entitlement spending does not figure in to the Democratic caucus's pay-as-you-go proposition--another inconsistency.
The Democratic version of pay as you go sets us down an irreversible path of higher taxes and higher spending. If expiring tax relief and expiring spending and appropriations were treated similarly, maybe the deficit reduction rationale behind pay as you go would be credible. As it exists now, it only reinforces an ideology of higher taxes and higher spending. The rejection of Senator McConnell's deficit-neutral offer on alternative minimum tax and the extenders proves my point. I will refer to a chart which shows the bias toward more spending and against current law tax relief.
If we look at that chart, we see the red line is one of mandatory expiring spending. We see the annual increase in nondefense discretionary spending going up very much. We see the annual cost of increased AMT, the solid green line, going down, and we see making certain other tax provisions permanent and what that does.
In any event, we found ourselves at an impasse on this point, but we still were able to reach this compromise that is before us.
In getting to that compromise, Democrats insisted on offsetting current law tax relief, and Republicans resisted more tax and spend. Republicans were willing to use revenue raisers for new policy and for long-term or permanent tax policy. Republicans did not want to use revenue raisers for new spending.
We came to a compromise by looking at this impasse as kind of a prism. A prism breaks one beam of light into several different shades. I have a chart showing the most famous prism of recent decades. It is a copy of the album entitled ``The Dark Side of the Moon'' by the band Pink Floyd. I am not, of course, a big fan of rock music. I am not a fan of its lyrics and its culture, but I think this piece of art by itself makes this very important point as ideal with this compromise legislation before us.
As we can see, there is a beam of white light on the left side of the triangular prism. On the right side, the beam of light is very fractured and multishades.
At the end of the day, we will have an alternative minimum tax fix, we will have extenders, and we will have an energy and disaster relief package that is a compromise. That is the white light on the left side. Republicans will see that the compromise meets their principles.
Let's say Republicans see the red light on the right. The offsets are good policy. From a Republican standpoint, there is enough new policy in the energy part of the deal to tie the nonenergy offsets; otherwise, energy incentives are reformed. That is our way of looking at this within the policy I annunciated a year ago. Republicans can see that the biggest item in the bill, the alternative minimum tax, is not offset. That preserves our point that the unfair alternative minimum tax--hitting 23 million middle-class Americans if we don't fix it--should not be a reason to raise taxes on other taxpayers.
Likewise, there is enough new and modified policy to tie to the offshore deferred compensation revenue. The bottom line is that the leaders were able to secure a longer term extension of current policy, as well as with the revenue.
Democrats are able to see the offset policy from their standpoint. That is the blue strand of light on the right side of the prism. Democrats wanted significant revenue raisers, and they got them. Both sides wanted the underlying revenue-losing extensions and new policy.
Most prisms are delicate. They are transitory. This one is no different. Our friends in the House need to see that. They can break this fragile prism. The shards will cut millions of taxpaying families.
This deal defers the very vital debate between Republicans and Democrats on whether we tax our way out of this fiscal situation--the Democratic view--or contrariwise, do we restrain spending. That is the Republican view. That is a very important debate which has held us up for so very long. That very important debate is deferred to another day.
Each side holds to its principles. Each side does the people's business. I thank Chairman Baucus and both leaders for getting us to this point of compromise where each of us can have some victories. But for me, it is preserving the very basic policies of the Republican caucus.
Using the prism that presents the opportunity to preserve tax relief for millions of middle-income families, I ask that we pass this compromise.
Madam President, one of the amendments we will be voting on today is the energy tax extenders bill that I just told you I would refer to in detail, and here it is.
I once heard a man say he always went everywhere with his wife because he never wanted to kiss her goodbye. Our dependence on foreign oil is very similar. As Americans, we know our dependence on foreign oil is not pretty but have not found a way to kiss that dependence goodbye. We need to enact commonsense, bipartisan laws, such as this energy tax extenders amendment that we will be voting on, the first vote midafternoon. It will help America move toward ending its dependence on foreign oil.
We are almost three-quarters of the way through this year, 2008. Since January 1 of this year, a number of energy tax relief provisions have already expired. In addition, a number of energy tax provisions are set to expire in just 3 months. For example, section 45, production tax credit for energy production for wind and refined coal, is extended through the year 2009.
Importantly, the wind production tax credit does not have the harmful 35-percent cap that the House Democratic leadership wants to place on it.
Another provision contained in this amendment is a new credit for electric plug-in vehicles. Consumers who purchase an electric plug-in--and it has to be a passenger vehicle--can get up to a $7,500 tax credit. If Americans are using electricity instead of gas to power their cars, it is a step toward reducing our dependence on foreign oil, much as ethanol has reduced our dependence on foreign oil for use in our cars by at least 5 percent.
Included in this amendment is a provision to reduce the tax on idling reduction units. These units are designed to eliminate the need for a big rig to idle to provide heating, air-conditioning, and electricity when it is stopped.
That brings me to the fact that we are saving diesel in big Mack trucks because they don't idle because we have this incentive for the separate unit to keep the cab cool while people are sleeping. It irritates me then, when I look back to this summer--and maybe even right now for all I know--when I saw Government officials using their chauffeured SUVs which were idling outside our office buildings wasting a great deal of fuel.
As Members of Congress, we should be setting a good example for the American people by conserving fuel and not wasting it. For instance, I have a Ford Taurus. You don't see it idling outside my home or outside of wherever I am momentarily stopped. You surely would not see my driver in it because I don't have one. If you do see anyone else driving my Taurus, please call the police because someone has stolen my car. I would like to refer to Ashton Kutcher, from Cedar Rapids, IA, saying: ``Dude, Where's my car?''
So far, the Senate has not passed these popular expiring and expired energy tax extender provisions. However, the Senate has now reached a bipartisan agreement that should enable us to pass this first amendment that we will be voting on midafternoon. This first amendment contains these popular energy tax extender provisions--many beyond what I have already talked about--as well as revenue offsets for these provisions.
My fellow Republicans were divided on whether energy should be offset. Some opposed any tax increase on oil and gas. Others, such as this Senator, looked to convert conventional energy tax incentives into incentives for alternative energy and conservation. On the other hand, almost all Democrats were in this ``conversion'' camp. I kind of feel myself like we have had a lot of incentives for old-time fossil fuels; that those industries are developed, and it is okay to move that money from that source over to alternative energy--a new industry that we are in the middle of developing and, in the case of ethanol, for a long time have been developing.
We compromised between Republicans and Democrats by cutting back the following oil and gas tax incentives, which totaled roughly $9 billion. First, we froze the manufacturing deduction for all oil and gas production at 6 percent. We reformed the use of the foreign tax credit for major oil companies. This offset is very important to get done. Finally, we raised the cap on funding for the oil spill trust fund.
To reach the $17 billion target for fully offsetting this energy tax package, we used a couple of nonoil and gas offsets totaling roughly $8 billion. First, we included the Bush administration's ``tax gap'' proposal to have securities firms report the cost of stock purchases and sales to the Internal Revenue Service. Secondly, we extended the unemployment surtax.
In keeping with the principle that tax offsets should make good policy sense and should be used to pay for new tax policy, we used these $8 billion in nonoil and gas offsets to pay at least $8 billion in new energy tax policy because it is a Republican program that if you have new tax policy, it should be offset. Our objection is to offsetting existing tax policy that might sunset; that you want to extend it in the same way it has been functioning for the last several years.
So the bottom line of this is that both sides compromised. Democrats yielded on unoffset popular current law tax relief--AMT as an example--and Republicans agreed to offsets that were good tax policy. But we ensured that our principle that major current law tax relief, such as the alternative minimum tax fix, should not be conditioned on other tax increases.
It is important to note that if we don't do more to encourage alternative energy, we might one day run out of oil and end up having to drive the alternative vehicles, such as Fred Flintstone, as you recall from the cartoon on television.
So I urge a ``yes'' vote on this first amendment that we will be voting on midafternoon, and I hope we can get this bipartisan agreement through and get it to the House of Representatives because we only have a little time left before we adjourn for the elections.
I yield the floor, and as I don't see any other Member who wants to speak, I suggest the absence of a quorum, and I ask unanimous consent, Madam President, before you call the roll, to divide the time that lapses in the quorum call between the two sides.
BREAK IN TRANSCRIPT