The research credit, which has existed in some form since 1981, has strong bipartisan and business support. Yet the prospects for Mr. Obama’s proposal are unclear. Congress returns from a break in mid-September but will be in session only a few weeks before leaving for midterm election campaigning. Also, Republicans do not want to give Democrats boasting rights to legislative victories, even for a proposal like this one, which Republicans have long espoused.So here is something that both parties support, but they don't dare make it permanent because of how that would affect budget projections. So, for almost 30 years, they've been playing around with this thing so they can do their gimmickry over the budget. I also suspect that another motivation that the legislators have is that they like voting for a popular tax cut so why not vote for it every few years or even months and then go tell small businessmen what they did for them. Maybe they can squeeze out a few more donations by keeping the tax credit temporary and worrying businessmen every time it needs to be extended. And then how typical is it that the Democrats let the thing expire last year in the midst of the recession? Why wasn't that part of the stimulus?
And there is the issue of the credit’s cost. It has always been passed as a temporary credit because of the revenue losses; Congress has extended it 13 times for as little as six months, and the uncertainty has long vexed businesses. It lapsed after 2009, and a proposal to renew it for this year is pending in the Senate.
Making the credit permanent would cost an estimated $85 billion over 10 years, and expanding it would cost $15 billion more, according to the administration.
Doing so, however, would end one of the longest-running budget gimmicks in town: Presidents and Congresses of both parties have called for a permanent extension but ultimately kept it temporary to reduce deficit projections. Based on that history, the Treasury would probably give up as much as $100 billion in the coming decade in any case.
Under Democrats’ pay-as-you-go law, however, the full 10-year cost would have to be offset by other savings.
Monday, September 06, 2010
In an article about President Obama's plan to propose making the research tax cut permanent, there is this little tidbit of how our nation's solons approach such matters.