(Bloomberg) Congressional leaders are pushing to reach a deal on a must-pass U.S. government spending bill as a Friday deadline nears to avoid a federal shutdown, even as they concede that lawmakers may have to work into the weekend and beyond.
Complicating talks are simultaneous negotiations over extending a package of tax breaks that expired at the end of 2014. Late Monday, House Ways and Means Chairman Kevin Brady of Texas filed a plan to extend most tax breaks that expired in 2014 to continue through 2016. The measure also would revise rules for real estate investment trusts.
AshLee Strong, a spokeswoman for House Speaker Paul Ryan, said in an e-mail Tuesday, “We are still hopeful for a larger agreement that includes permanent tax relief for families and small businesses, but this is another option.”
Second-ranking Senate Republican John Cornyn of Texas said Monday that Congress may leave town for the holidays with such a two-year extension of tax breaks, instead of coming up with a new plan to make some of them permanent as he and many members said they want to do.
Congress has passed a series of short-term extensions of the tax breaks, including those for research and development and small-business investments. Another extension would have to be passed soon to give the Internal Revenue Service time to print forms for the 2015 filing season.
R&D Tax Credit and Sales Tax Break
Tax breaks that would be extended in the bill filed late Monday include those for companies’ research and development, bonus depreciation for capital investments, and a sales tax deduction that’s popular in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming because those states don’t tax income.
"My sense is there’s a lot of momentum to end our work by Dec. 11," Cornyn told reporters at the Capitol. "I think that’s sort of a bipartisan, bicameral wish."
Lawmakers will need time to review a tax extension plan before voting on it, said Cornyn.
"What that tells me is it’s looking more and more like we end up with a default position, which is a two-year bill,” Cornyn said. “I hope I’m wrong."
Rush for Holidays
Pete Sessions, the Republican chairman of the House Rules Committee, said he objected to any rush to begin the holiday break for lawmakers.
"We need not be trying to sacrifice getting our work done to go home," Sessions of Texas said in an interview.
Current government funding runs out after Friday. Republicans insist they won’t allow another government shutdown like the 16-day partial closing in October 2013 in an unsuccessful bid by party members to end funding for Obamacare. That shutdown cratered public opinion poll numbers for Republicans, who are particularly wary of a repeat as the 2016 election nears.
Democrats have said that as part of the tax extension package, they want the Child Tax Credit—expanded in 2009 as part of the fiscal stimulus—to be indexed for inflation and made permanent.
House Minority Leader Nancy Pelosi, a California Democrat, said Monday in a letter to colleagues that Republicans rejected indexing that credit.
There is “strong opposition” among Democrats to combining the spending and tax-extension bills, she said. She also reiterated in the letter that members of her party won’t support policy provisions inserted in the spending bill by Republicans.
"In order for us to support the omnibus bill, the poison pill riders must go," Pelosi said.
Complications in the spending bill discussions are not over the total spending, which lawmakers set at $1.1 trillion earlier.
"There’s been a number of issues that have not been finalized," House Majority Leader Kevin McCarthy of California told reporters.
Some of the Republican policy provisions Democrats said they oppose include language to prevent President Barack Obama from moving forward with a plan to cut carbon pollution, and a prohibition on the entry of Syrian refugees.
Ryan of Wisconsin said Monday that extra time may be needed beyond Friday to pass a spending bill and agree on tax extensions.
"It might take us more than just this week to get these issues put together correctly," Ryan told the radio station WBEL, which broadcasts in Wisconsin and Illinois.
McCarthy said there won’t be a government shutdown because Congress can pass a short-term funding extension to keep the government operating after Friday.
While Obama has said he won’t sign another stopgap spending bill, he would approve a short-term measure if a final deal is imminent, White House spokesman Josh Earnest said Monday. "Congress needs to pass a budget on time," he said.
Lawmakers’ own holiday schedule has them adjourning for the year on Dec. 18.
—With assistance from James Rowley and Loren Duggan.
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