The Senate last week passed another jobs bill (HR 4213), which includes a one-year extension for the lapsed biodiesel credit program and a $1.5-billion ad hoc agricultural disaster assistance package. However, the $137.9 billion measure faces a rocky road with both the House and White House over conflicting features and budget offsets. Senate leaders still have to get the measure through the House and resolve any disagreements before it can be sent to President Obama.
The bill before the Senate includes nearly $31 billion in "tax extenders" that would preserve –– but only through 2010 –– provisions including the research and development credit, a deduction for teachers' out-of-pocket expenses, and incentives for producing biofuels (biodiesel tax extender retroactive to Jan. 1). It also would extend tax breaks for people affected by natural disasters, favorable tax treatment for farm equipment and tax incentives for investment in economically distressed areas.
The bill would extend the unemployment, health insurance subsidies, flood insurance and small-business provisions through Dec. 31. The Medicare doctors' payment adjustment would last through Sept. 30, and states would get a six-month increase in federal payments for Medicaid.
Regarding the biodiesel tax incentive program, the next question is when and for how long will the program be further extended. A concerted effort will be made later this year for a five-year extension, to be included with an extension of the ethanol blender credit program which expires at the end of this year. Whether the biodiesel industry will get its hoped-for five-year extension depends in large part on finding budget offsets for the longer-term extension. Some sources say the next extension for both biodiesel and the ethanol blender program could take place during a lame-duck session of Congress after the Nov. 2 elections.
The budget issue is a major difference between House and Senate Democrats. House Democrats and the White House object to nearly $40 billion in partial offsets used in the Senate bill because the administration wants to use that money for its healthcare reform proposal. The House instead prefers other offsets, including taxing "carried interest" profits earned by private-equity and other investment fund managers as ordinary income instead of at the lesser capital gains rate. The House passed its version of the larger jobs bill in December.
