–Senate Democratic Leaders Expand House’s $113 Billion Package
–Senate Bill Would Add $78 Billion To Deficit Over Decade
–Republican Leaders Continue To Hammer Bill For Expanding Deficit

By John Shaw

WASHINGTON (MNI) – The Senate will resume consideration Wednesday
of a tax cut and benefit extension bill.

The package has grown from the $113 billion that was approved by
the House several weeks ago to a Senate package that now costs $140
billion.

The bill passed by the House two weeks ago would extend about a
dozen tax cuts that expired at the end of last year, expand unemployment
benefits, and provide a 19-month extension of current Medicare payments
for doctors, the so-called “doc fix.”

Senate Democratic leaders have made two main changes to the bill
from its House iteration. The Senate bill would increase the deficit by
$78 billion over a decade.

One of the changes the Senate made to the House-passed bill
increased Medicaid assistance to state governments by about $24 billion.

A second modification softens the tax hike on the carried interest
earned by venture capitalists, real estate investors and private equity
managers.

Under the House bill, 25% of carried interest would be treated as
capital gains, as it is now, and 75% would be taxed as ordinary income,
which is taxed at a higher rate. The Senate bill would change that ratio
to 35-65 or, for assets held for more than seven years, 45-55.

Senate Majority Leader Harry Reid has said that he will support an
amendment to give a health insurance premium subsidy for unemployed
workers under the COBRA program, a provision that was removed from the
final version of the House bill because of its cost.

Reid has said he hopes the Senate can approve the package soon. “We
have to wind this down as quickly as we can,” Reid said Tuesday.

Senate Minority Leader Mitch McConnell has said that Republicans
are worried about the deficit-increasing impact of the overall package.

“There is a growing feeling … that these kind of packages ought
to be paid for,” McConnell said.

It is important, McConnell said, to “figure out a way to pay for
this bill.”

McConnell said Republicans don’t like a provision that raises the
excise tax on oil that funds a special oil spill liability trust fund
from 34 cents in the House bill to 41 cents in the Senate version. The
tax is currently 8 cents per barrel.

McConnell said this provision is being used to pay for the broader
tax and benefit package rather than for oil spill liability.

** Market News International Washington Bureau: (202) 371-2121 **

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