An Alternative Minimum Tax (AMT) patch, a mental health parity bill, a package of tax break extensions, and tax breaks and relief for victims of natural disasters, specifically Hurricane Ike. These don’t sound like they have any relation to the relief of an financial crisis, but, as of today, they will all play a major role. The new massive bailout package — sorry, “rescue” package — introduced in the Senate includes all of these measures. The inclusion of these measures could help push the underlying Emergency Economic Stabilization Act through Congress or torpedo it by injecting inter-chamber politics into an already tense political situation.
At the heart of the tacked-on legislation is a combination of an AMT patch and tax break extensions for corporations and renewable energy investments. Senate Democrats, most prominently Sen. Max Baucus, believe that the inclusion of these measures will help draw the support of House Republicans who previously voted down Monday’s bailout bill. However, this measure is already drawing the ire of House Democrats, including Blue Dogs and Majority Leader Steny Hoyer.
The AMT/tax break extension package was previously passed by the Senate, but House leaders, pushed by Hoyer and the Blue Dogs, intended on shelving the proposal due to its failure to abide by pay-as-you-go rules (providing offsetting cuts to go with revenue reductions). The inclusion of the package in the bailout bill will revive the animus between the two Democratic factions. Hoyer has already stated that the inclusion of the “tax extenders” is “controversial” and was included only because “they thought that’s the only way they could get it passed.” Of course, the Blue Dogs, being prominent supporters of the bailout bill, may find themselves in a situation where this compromise is the best they can get.
Seeing as how every vote counts at this point — the bailout only needs 12 votes to pass in the House — the inclusion of the mental health parity legislation previously passed by the House could help sway one or two votes. The chief Republican cosponsor of the bill, Rep. Jim Ramstad, voted against the bailout bill on Monday. Also, one the bill’s seven cosponsors, Rep. Pete Stark, also voted against the bailout. The inclusion of the defining bill of Ramstad’s career, as he retires this year, could be enough to sway this one vote into the “yes” column.
In classic congressional fashion, the Senate has decided to use a crisis piece of legislation as a way to push through a massive package of other priorities forcing an inter-chamber factional battle to come to a head. The inclusion of this controversial legislation could also serve as a remedy to the current failure in the House.
Poison pill or appeasing antidote? We’ll wait and see.