Scope of extenders package shrinks as clock ticks

Source: By Geof Koss, E&E News reporter • Posted: Thursday, December 12, 2019

After days of pessimism surrounding year-end talks on energy tax incentives, key senators said yesterday there were signs of progress in reaching a deal in the coming days.

Members and lobbyists signaled this week that the range of tax items tied up in the negotiations over extending an array of expired or soon-to-be-expired energy tax incentives was growing smaller.

Senate Finance Chairman Chuck Grassley (R-Iowa) told E&E News last night there may be signs of life in the talks, which have been stalled in part because of House Democrats’ insistence that a costly expansion of the earned income tax credit (EITC) be part of the mix.

Asked whether there was any progress, Grassley responded: “As of 10 o’clock this morning, no, but maybe now, yes, but I can’t give you an update past 10 o’clock.”

Sen. Maria Cantwell, who for weeks has expressed frustration with the broad mix of tax policies under consideration for a year-end deal, told E&E News that “a little bit” of progress had been made in negotiations.

The Washington Democrat declined to elaborate but said the discussions have “definitely been a roller coaster.”

The remarks from the two senators — who share common cause in seeing an expired biodiesel tax credit extended — followed a House Democratic caucus meeting yesterday morning where members discussed scaling back their year-end ambitions.

Ways and Means member Bill Pascrell told E&E News that debate over the scale of a tax bill is driven in part by the ticking clock.

“There’s so many things to do in a very short period of time, that’s going to be shrunk,” he said yesterday.

Pascrell downgraded the odds of striking a deal in time to be added to the next funding bill that comes up by Dec. 20, when current funding runs out.

“I would have told you a month ago it was 50-50,” the New Jersey Democrat said. “I would say it’s less than 40-60.”

Pascrell pointed to the variety of policies under consideration. “People add things, they take them out, what you started with you don’t have now,” Pascrell said. “And there’s a lot of people still pushing to get other things in.”

While news reports indicated yesterday that House Democrats may scale back their requests for the EITC — a major sticking point for Republicans — Pascrell insisted it remains a priority. “It’s a big deal,” he said.

‘A week is a long time’

A slimmer tax package may be easier to negotiate — a point Cantwell reiterated yesterday. “I said like a month ago that would be the problem,” she said of the push for a big package. “People always want to try to add like a 1,000 things.”

Yet if negotiators just stick to more than two dozen expired tax breaks — which include incentives for efficiency, alternative vehicles and biofuels — that also complicates efforts by Democrats on both sides of the Capitol who want to include expansions of existing tax breaks.

They include the electric vehicles tax credit; an extension of the renewable production and investment tax credits, which are scheduled to phase out under a 2015 tax law; as well as create incentives for energy storage (see related story).

Senate Finance member Ben Cardin (D-Md.) said Tuesday that he was “down to the lowest expectations” on extenders. “And that is just change the date right now. That’s terrible. We should do a lot more, but if we don’t get that done, it’s a horrible loss,” he said.

In the absence of a deal, Ways and Means member Kenny Marchant (R-Texas) said yesterday that leaders would likely try again in the first quarter of 2020.

That is seen as even more of an uphill fight, given the challenges in finding must-pass bills to add a tax deal to and the fact that legislating is harder in an election year.

But Rep. Earl Blumenauer (D-Ore.), a senior Ways and Means member, said Democrats are focused on striking a deal this year.

“We can do this in the next 10 days if all of the people that are harassing us train a little attention to get a little movement on the Senate side,” he said in a brief interview, adding that House Democrats are still awaiting a “meaningful counteroffer” from their Senate counterparts.

Finance member Debbie Stabenow (D-Mich.), who is pushing for an expansion of the EV tax break in the year-end negotiations, said yesterday that break remains in the mix for a deal.

“I’m an eternal optimist,” she told E&E News. “You know, a week is a long time in the United States Senate, so we’ll see.”