Big tax-break package piles on tons of red ink

WASHINGTON - By approving a massive package of tax breaks Thursday, House Republicans - who have made deficit-slashing the holy grail of their majority - just piled on nearly $650 billion in red ink.

The 318-109 vote, part of a sweeping budget deal expected to clear Congress by week's end, was supported by business and antipoverty advocates as a down payment on a broader tax overhaul and a way to make permanent dozens of specialty tax breaks that have been renewed year to year.

But passage served as a reminder of the dominance in the GOP of so-called supply-siders over deficit hawks. Most Republicans, including Speaker Paul Ryan (R., Wis.) believe tax cuts will more than pay for themselves by stimulating economic growth. Only a handful of Republicans joined most Democrats in opposing the measure.

"Where did all the deficit hawks go?" asked Minority Leader Nancy Pelosi (D., Calif.), who opposed the bill. "Probably part of the endangered species, I don't know."

The bill now moves to the Senate, where it is expected to be combined with a $1.1 trillion omnibus spending measure to avert a federal shutdown and keep the government funded through Sept. 30. Final votes are set for Friday, and President Obama is expected to sign the combined package into law.

As a whole the package represents one of the biggest domestic policy initiatives in years, and exposes the trade-offs that are commonly made in Congress to reach consensus.

The tax breaks were needed to make the broader package more palatable. Many conservative Republicans oppose the spending bill because it reverses some of the sequester cuts Congress put in place just a few years ago, but they embraced the tax breaks.

"This is a good bill, this is an amazing bill," said Rep. Pat Tiberi (R., Ohio) during the floor debate. "Go talk to your small businesses. ... This is going to provide amazing certainty."

But, noting that the measure's overall price tag soars to $800 billion after including interest payments over the next decade, Rep. Steny H. Hoyer of Maryland, the Democratic whip, countered: "The certainty of this bill is that we will explode deficits."

Democrats support several of the tax breaks, including the $1,000 child tax credit and others to encourage business investment and fight poverty. In the omnibus bill, Democrats also fought to include a temporary halt to new Obamacare taxes, including one on medical device manufacturers and another on so-called Cadillac health insurance policies. Labor unions opposed the tax on high-priced plans, fearing it would affect its members the most.

But budget hawks in both parties criticized what they called a violation of the GOP's usual policy of requiring any new spending to be paid for with cuts to other programs. Instead, the party approved the tax breaks without offsetting the reductions elsewhere in the budget.

Outside budget gurus warned that even as the nation's annual deficits have tumbled from historic highs during the Great Recession, the extra outlays will only deepen the federal government's broader fiscal challenges.

A broader effort at tax reform, which had been one of Ryan's top priorities before becoming speaker, has eluded Congress.