Most Active Stories
Wed January 2, 2013
Fiscal Cliff Deal Includes Breaks For Tuna Canneries, Rum Makers
Originally published on Wed January 2, 2013 7:51 pm
AUDIE CORNISH, HOST:
The American Taxpayer Relief Act is 157 pages long. It's not all about avoiding impending tax hikes. Some of it has to do with tax benefits for ceiling fans and tuna canneries. NPR's Ari Shapiro is here to explain.
And Ari, in spending bills, little weird provisions like this might be called pork-barrel spending or projects. Are we looking at a kind of earmark?
ARI SHAPIRO, BYLINE: Not exactly. Congress has banned earmarks. It's helpful to quickly look back at why. For years, individual appropriations were the ways that laws got passed. Somebody might object to a bill, but say my district really needs a bridge. The bridge would get on the bill, you'd get enough votes to make a law, but the practice got out of hand. Earmarks exploded, in some cases involving conflicts of interests, campaign contributors, bribes.
I spoke with Scott Lilly, who spent decades on the House Appropriations Committee's Democratic staff. He's now at the Center for American Progress. He told me the low point in this story came in a 2005 highway bill.
SCOTT LILLY: That bill had $23 billion worth of earmarks in it. There were more than a dozen earmarks per member of House and Senate combined. I think there were six-and-half-thousand earmarks in that one bill.
SHAPIRO: So there was a huge backlash and Congress no longer allows that kind of pork. But this fiscal cliff bill still has tax provisions helping everything from race tracks to electric vehicles.
CORNISH: So if it's not pork, what is it?
SHAPIRO: Well, a lot of it's what's called extenders. Over the years, a series of tax cuts - mostly for businesses, but some for individuals - have been added to the tax code on a temporary basis, in theory. But in practice - according to Bob Greenstein, who's president of the Center for Budgetary and Policy Priorities - a lot of these provisions just don't go away.
BOB GREENSTEIN: Some were originally justified as just having a temporary need. Others, the people, the interests seeking the tax cuts really wanted them on a permanent basis, but the price tag was too high. So they were able to get them passed by doing them on a one-year basis. And this has become a bigger and bigger package of tax cuts.
SHAPIRO: So, Audie, right now the tax code includes about $75 billion a year in these so-called temporary provisions. Some of them sound ridiculous. Like there are sections related to Puerto Rican rum and tuna canneries in American Samoa, but actually, those were a very small amount of the total spending on temporary tax benefits. Most of them have some substance to them.
For example, the biggest is the research and development tax credit, which costs $14 billion a year. Everyone, for the most part, agrees that the R&D tax credit would be more effective at spurring innovation, if it were permanent and people could rely on it. Instead, like all the other temporary extensions, it just gets renewed year after year, along with everything else on the list.
CORNISH: So would an overhaul of the entire tax code actually help get rid of some of these provisions?
SHAPIRO: That's the Obama administration's hope. I spoke with a White House official today who said they would have preferred a detailed reevaluation of the tax code that could clear out some of the underbrush. And they still believe that's possible but there's another perspective, which is that each of these esoteric perks has a very highly paid lobbying team behind it.
And so, if you open everything up for analysis, some of these things are just going to become permanent at the end of a very long fight.
CORNISH: Now, another part of this deal seems to have not that much to do with the fiscal cliff.
CORNISH: Parts of the Farm Bill are in the package. What happened there?
SHAPIRO: Yeah. Well, along with the fiscal cliff, we were looking at something with a slightly absurd name: The Dairy Cliff. Farm subsidies were about to expire after five years and that could've doubled the price of a gallon of milk. So to keep that from happening, Congress included a nine-month extension of the subsidies in this fiscal cliff bill.
It did to go as far as some farmers wanted. For example, there's no disaster relief money for people who lost livestock in recent droughts. But the extension buys Congress more time to hopefully come up with another long-term solution, packed into this short-term solution they packed last night.
CORNISH: NPR's Ari Shapiro, Ari, good talking to you.
SHAPIRO: You too, Audie. Transcript provided by NPR, Copyright NPR.