Bonanza for special interests or the jumpstart needed to create new jobs? A bill passed this week in the Senate is probably a little of both as it attempts to replace subsidies with tax breaks for corporate America.
The bill approves $170 billion in corporate tax cuts over the next decade to take the place of export subsidies that used to be given to U.S. companies. The World Trade Organization outlawed about $5 billion of the subsidies and the European Union retaliated by slapping $4 billion in on U.S.-made products, the Washington Post reported. The tariffs, which began in March at 5 percent and now stand at 7 percent, were due to increase over time to as much as 17 percent by March.
The Senate approved the measure 92 to 5, ending a two-month impasse when Democrats agreed to limit debate in return for the Republicans agreeing to allow a vote to extend the supplementary unemployment benefits for 13 weeksâa key election year issue for the Democrats, the Post reported.
A similar bill has been hung up in the House due to infighting among Republicans, but many expect that bill to be spurred on by the Senate's action, potentially allowing the measure to become law later this year.
The Democrat's initiative on unemployment led to embarrassment for Sen. John Kerry (D-MA), the presumptive Democratic presidential nominee, when he failed to cast a vote, denying his party the 60th vote they needed to pass the measure. Kerry, who supported the unemployment proposal, was campaigning in Kentucky.
Some say the tax cut legislation is a boondoggle for special interests, since it includes hundreds of pages of tax breaks to assist U.S. manufacturers, ends corporate tax abuses and extends special favors to numerous special interests, including cruise ship operators and NASCAR track owners, the Post reported.
The bill would also cut income taxes for U.S. manufacturers and spurred debate over whether it will actually create new jobs.
Passage was important to demonstrate that the United States abides by its trade agreements, to end the punitive European tariffs, to encourage domestic manufacturing and to close some "very abused corporate tax loopholes," said Finance Committee Chairman Charles E. Grassley (R-Iowa), chief sponsor of the bill, the Post reported.
"This is the biggest loophole-closing bill in my memory," said Sen. Max Baucus (Mont.), ranking Democrat on the panel and Grassley's partner in writing the bill.