Democrats cry foul over tax break that would raise deficit

WASHINGTON - House Republicans are expected to rally Wednesday around a business tax break that's likely to cost the government $155.5 billion over 10 years.

They would do it without offsetting spending cuts or tax increases. Most lawmakers have long decried such deficit spending, a practice that fueled the insurgent tea party movement and its campaign to pare the size and reach of government.

And protests over spending above incoming revenue have helped stall Democrat-backed emergency programs such as extended unemployment benefits.

This latest battle over tax breaks - notably the research and development tax credit scheduled for a House vote Wednesday - is a vivid example of the clash between very different political philosophies, as well as a strategy of political amnesia when the issue demands it.

Democrats have long contended that emergencies need not be paid for. For months, they've urged extending the emergency jobless benefits, which expired Dec. 28. Republicans tried to block it, arguing not only that such benefits often discourage people from looking for work but also that they cannot be afforded when the federal debt is so high.

In April, the Senate ended a months-long impasse and passed legislation to extend unemployment insurance for the long-term jobless through the end of May. Five Republicans joined Senate Democrats on a plan with a series of offsets, including a change in companies' pension payments. The House hasn't acted on the bill.

Republicans defend tax cuts by saying people will have more to spend, businesses will have new incentive to invest and hire, government will shrink, and the economy will boom.

The House plan not only makes the tax break permanent, but it also raises the tax credit rate from 14 percent to 20 percent, all without accounting for the billions in revenue the government would lose.

"It is allowing businesses who invest to keep more of that investment, to plow it back into research," said House Majority Leader Eric Cantor (R., Va.). Added Rep. Kevin Brady (R., Texas), one of the bill's chief sponsors: "I'm tired of losing ground to America's global competitors."

Democrats cry hypocrisy.

"All of the wringing of hands and gnashing of teeth with reference to the deficit seems to go by the boards when the Republicans talk of tax cuts," complained House Minority Whip Steny Hoyer (D., Md.).

They also contend that many economists say unemployment insurance benefits are spent quickly and help promote growth.

The White House said Tuesday that if the bill reached President Obama's desk - which is highly unlikely - he would veto it.