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Democrats Take Aim at Business Tax Breaks

Emboldened by Republican support for eliminating ethanol tax subsidies, Senate Democratic leaders are poring over a list of corporate tax breaks and eyeing votes that could put GOP Senators on the spot.

“We’re looking at going on offense on these ridiculous taxpayer-paid subsidies they are protecting,” one Senate Democratic leadership aide said.

Democrats said they haven’t yet settled on which subsidies could find their way to the Senate floor, but eliminating a tax break for private jets is among those that have been discussed, the aide said.

Earlier this year, Democrats lost a vote on eliminating oil industry tax breaks but felt their political point was made.

“We did that with the oil subsidies, I thought, very effectively, and so we’re looking at other options along those lines,” Senate Majority Whip Dick Durbin (D-Ill.) said.

And Democrats and the White House have been pushing for about $400 billion in new revenue as part of bipartisan negotiations on raising the federal debt ceiling. Those negotiations collapsed last week when House Majority Leader Eric Cantor (R-Va.) and then Senate Minority Whip Jon Kyl (R-Ariz.) pulled out after declaring an impasse on taxes.

But Democrats believe the June 16 ethanol vote exposed a rare split on taxes in the GOP and helped established the principle that corporate tax loopholes could be closed to help shrink the deficit. By setting up repeated votes, Democrats could force Republicans to choose — again and again — between these tax provisions and cuts to social programs such as Medicare and Medicaid.

Kyl said Monday that while tax increases cannot be part of a deal, Republicans were willing to look at user fees and other revenue items.

“Revenues have never been off the table,” Kyl said, declining to discuss specifics other than to say it was a relatively small part of the overall conversation.

“There are some user fees that are probably way low compared to when they were originally set, and there are some other receipts that the government could receive,” he said. That includes means testing of some federal programs, Kyl said.

But he said the ethanol issue was not necessarily a precedent.

“Ethanol was a one-off proposition. It’s bad policy, and I don’t care if it raises revenue or loses revenue or what, we should eliminate it,” Kyl said.

He added that there are some other similar items in the tax code that could raise revenue, but Republicans generally want to eliminate those that Democrats like and Democrats want to eliminate the ones that Republicans like.

Kyl also said Republicans would prefer to eliminate tax breaks as part of an overall tax reform package.

Minority Leader Mitch McConnell (R-Ky.) also went to the Senate floor before his meeting Monday with President Barack Obama and ripped Democratic proposals for another round of stimulus spending and tax increases. “My message to the president is really quite simple,” he said. “It’s time for Washington to focus on fixing itself. It’s time for Washington to take the hit, not the taxpayers.”

How Democrats might bring tax loophole votes to the floor isn’t clear; Democrats have been frustrated repeatedly by a tactic they decry as “filibuster-by-amendment” from Republicans who offer divisive proposals to relatively noncontroversial bills. The GOP counters that Democrats have not brought much of an agenda to the floor and have run from the most basic tenet of governing — passing a budget.

Without an aggressive Democratic agenda to oppose, the GOP has been hijacking relatively modest measures on the floor for scores of unrelated amendments.

McConnell said Sunday that he would force a vote on a balanced budget amendment to the Constitution the week of July 18.

Adam Jentleson, spokesman for Senate Majority Leader Harry Reid (D-Nev.), said McConnell might not get his way.

“He can say it all he wants, but the schedule is up to the Majority Leader,” Jentleson said.

At any rate, the amendment gives Republicans a talking point and a more ambitious agenda item than Democrats have tried to move all year.

Democrats have already started messaging against the balanced budget amendment as a death knell for Medicare.

Rep. Chris Van Hollen (Md.), who represented Democrats in the debt talks, called the proposal “merely another method to end the Medicare guarantee while protecting tax earmarks for corporate special interests and expanding tax breaks for millionaires.”

Democratic aides said they’ve forced more tough votes on Republicans than vice versa — including holding a vote on the House budget plan authored by Rep. Paul Ryan (R-Wis.). That plan calls for turning Medicare into a subsidy for private insurance plans for future retirees.

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