K Street mounts blitz for tax breaks

Source: Anna Palmer • Politico  • Posted: Tuesday, December 6, 2011

K Street wants to deliver Big Business a Christmas miracle.Unless a set of tax perks, credits and other goodies worth billions to industry gets slipped into a bill this month, they’ll expire — and lobbyists for a variety of interests are working hard to keep them alive.Passing the “tax extenders” package used to be routine, but this year, the price tag — about $30 billion over 10 years — makes them unpalatable when slashing spending is the agenda. Plus, the perks have become embroiled in a back and forth as the two parties negotiate contentious issues such as extending unemployment insurance.Still, the hurdles aren’t stopping K Street from making a last-ditch lobbying effort to pressure Congress to attach some of the research and development tax credits to must-pass legislation before lawmakers leave for the holidays — an intense pressure campaign, and even if they don’t succeed this month, the issue isn’t going away next year.

Industries as diverse as real estate, housing, education, energy and automobiles are making the case to lawmakers that passing an extenders package is just as important to the economy as measures that appear more likely to pass, such as unemployment insurance, the doc fix and the payroll tax holiday.

“I’m working on several tax extenders, and we’re working our butts off,” said Holland & Knight’s Rich Gold, who gave the package a 1-in-10 chance of passing this year. “I’ve also been telling my clients it’s a little bit of Luke Skywalker threading the needle to get to the Death Star.”

The perks have a few shots at resurrection next year. Congress could take action to retroactively pass them in the first quarter of next year. Lawmakers could also wait until the lame-duck session at the end of 2012, when the perks could be slipped into a bigger tax package with the expiring Bush tax cuts.

“I don’t see how extenders get done without an easy pay-for,” a Democratic lobbyist said, noting that Republicans have opposed using the Iraq War drawdown money in year-end negotiations.

One Senate Democratic aide said the tax cuts represent priorities that include helping families cover their bills and creating jobs through research and development.

“Providing certainty is critical both to businesses looking to hire and families already having trouble making ends meet,” the aide said. “We simply need to get this done — taxpayers across the country need this tax relief, and our economy needs the boost it provides.”

House Ways and Means Committee Chairman Dave Camp (R-Mich.) said last week that lawmakers haven’t decided yet whether they will try this year to extend expiring miscellaneous tax breaks. There is precedent for not moving forward. Five times over the past 10 years the provisions have been acted on retroactively.

Privately, GOP and Democratic aides are pessimistic that lawmakers will take up the dozens of choice credits and grants given the difficulty they are having in coming up with an agreement on more important elements of a year-end package.

That hasn’t stopped K Street, and the renewable-energy industry in particular, from making an aggressive play to get them extended by the end of the year.

The wind industry in particular has turned up the pressure. Facing strong political headwinds that made extending a tax credit for alternative energy unpopular, the American Wind Energy Association is putting everything it has into getting Congress to address the issue.

“It’s not only the top priority, it is the drop everything else and put everything you’ve got and more into it,” said Rob Gramlich, senior vice president of public policy for AWEA. The wind provision doesn’t expire until the end of 2012, but AWEA argues that Wall Street is beginning to withdraw funds and invest in other countries. The group launched a new website last week dedicated to saving wind energy jobs.

“Our tax credit effectively expired already because of the time it takes to build and manufacture the turbines,” Gramlich said. “It’s really urgent right now. Businesses are making decisions.”

The ethanol industry is also looking for tweaks to the extenders package. While the widely unpopular subsidy known as the Volumetric Ethanol Excise Tax Credit has been declared dead, some producers and other ethanol interests are trying to get certain blends to be a part of the Alternative Fuel Credit.

Van Scoyoc Associates’ Jeff Trinca, who represents the Coalition for E85, acknowledged ethanol producers are facing an uphill battle in getting a credit that would amount to about $50 million per year.

“I would say we have a clear path where we want to go,” Trinca said, but he acknowledged that this week will be key to see what the appetite is on the Hill to address the issue.

The push isn’t just about extending expiring provisions. Several lobbyists said they are focused on what industries could be targeted as potential offsets to pay for the payroll tax-cut extension. Groups like the U.S. Travel Association have voiced concerns about raising aviation taxes.

“Raising aviation taxes as a ‘pay-for’ is a budgetary sleight of hand that works in the halls of Congress but discourages travel, hampers job creation and slows economic growth in the real world,” the association’s president, Roger Dow, said in a statement.