Grassley wants to revive credits in debt ceiling bill

Source: Geof Koss, E&E News reporter • Posted: Wednesday, February 27, 2019

Senate Finance Chairman Chuck Grassley said yesterday he’d like to use upcoming legislation to raise the debt ceiling to extend an assortment of expired energy tax breaks.

Asked about the debt limit, which is suspended until March 1 under a law signed by President Trump last February, the Iowa Republican said he’s been asking, “Can we attach extenders to it?” Grassley told reporters, “That’s what I’m interested in.”

The chairman has hoped for a quick revival of the expired tax breaks, including a key biodiesel incentive he supports, as well as efficiency incentives. But efforts to add the extenders to the spending deal signed into law earlier this month did not pan out (E&E Daily, Feb. 6).

Grassley said yesterday the debt limit or a package addressing retirement tax savings may be the most viable legislative options for extenders. “Those are the only two vehicles I see right now,” he told E&E News.

There is a precedent for tackling extenders with the debt ceiling. Last year’s law extended the tax breaks retroactively for 2017, but that meant they were expired again for 2018 even before the ink was dry on the bill.

Grassley said an increase for the debt limit would likely be tied up with budget talks that may not be settled “until the summer” because of the federal government’s ability to continue making payments on its debt through “extraordinary measures” even after the legal limit is reached.

While the debt fight traditionally is the venue for negotiating adjustments of automatic spending cuts that would otherwise kick in, the White House is taking a hard line this time around.

In an op-ed published yesterday in RealClearPolitics, acting White House budget chief Russ Vought threw cold water on expectations that the two parties could negotiate an agreement to raise spending caps in the coming weeks.

“In each of these deals, Democrats in Congress held defense spending increases hostage for increases in domestic spending,” Vought wrote. “We should expect more of the same from Democrats this year.”

An additional budget deal, Vought added, “would be a bad deal for taxpayers. The Trump administration has a better plan.”

In its upcoming budget submission, expected next month, the White House will seek to maintain the existing spending caps, while increasing defense spending by labeling additional Pentagon dollars as part of the Overseas Contingency Operations (OCO) funds, which are not subject to the caps.

Conservatives have long complained the use of the OCO is a budgeting “gimmick,” as Vought noted.

“Fiscal conservatives may feel uncomfortable using OCO in this way,” he wrote. “Yet, as long as Congressional Democrats insist on demanding more social spending in exchange for continuing to fund defense spending, expanding the use of OCO funds remains the administration’s only fiscally responsible option in meeting national security needs while avoiding yet another increase to the spending caps.”