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Democrats Target McConnell’s Horse-Racing Tax Break

Senate Majority Targets Horse-Racing Tax Break to Pressure McConnell

Senate Democrats are trying to hit Minority Leader Mitch McConnell (R-Ky.) where it hurts — at the racetrack.

Sen. Jeff Merkley (D-Ore.) plans to go to the Senate floor Thursday and call for eliminating the $126 million in tax breaks for the horse-racing industry that McConnell secured in the 2008 farm bill. Democrats are dubbing it the “Bluegrass Boondoggle” and are spotlighting it as part of their broader offensive to pressure Republicans to agree to eliminate corporate tax breaks in any bipartisan debt deal.

“There should be no sacred cows, and there should be no sacred horses,” Merkley said in an interview. “This is just one example of the special favors for the well-connected that need to be reviewed as we deal with our deficit.”

Merkley rejected the argument that 
anti-tax activist Grover Norquist has made that eliminating any tax break amounts to a tax increase.

“Any sane person recognizes that these are spending programs,” Merkley said, echoing the likes of Sen. Tom Coburn (R-Okla.), who spearheaded a recent vote to eliminate an ethanol tax subsidy.

Merkley said horse racing in particular — known as the “sport of kings” — could amount to a poster child for the effort to roll back narrowly targeted subsidies.

“It’s a sport for the best-off. And why should we, in this difficult time, be subsidizing this activity for the best-off, while people are on the floor talking about cutting fundamental support for those who are hungry in America?” Merkley asked.

McConnell in 2008 took credit for authoring the tax break, which allows accelerated, three-year depreciation for racehorses. At the time, he called it an issue of fairness given the limited racing life of many horses.

“The horse industry employs 50,000 Kentuckians and contributes $3.5 billion to our economy year-round. By adding this provision to the bill, we have ensured that this important part of our farm economy is treated fairly,” McConnell said then.

More broadly, McConnell has said that eliminating tax breaks should instead be part of a larger tax reform package, and he has rejected — along with Speaker John Boehner (R-Ohio) — including any tax increases as part of a debt deal.

Democrats, meanwhile, will call for eliminating a handful of other tax breaks Thursday that they see as indefensible, including those for corporate jets, oil and gas subsidies, the carried interest tax break that benefits hedge fund managers, and deductions for the cost of shipping jobs overseas, a senior Democratic aide said.

The direct jab at McConnell comes a day after Senate Democrats held a press conference asking him why eliminating ethanol subsidies can’t be part of a debt deal even though he and 33 other Senate Republicans voted to eliminate them.

“Leader McConnell, which is it? Are you for eliminating the ethanol subsidy or not? And if you’re okay with including it in the debt ceiling, then why not other revenues to ensure that the sacrifice is shared?” asked Sen. Charles Schumer (N.Y.), the No. 3 Democrat and messaging chief.

Several Senate Republicans, including Sen. John Cornyn (Texas), have said they are willing to include ethanol and similar tax breaks as part of a debt deal. But even Cornyn noted that ultimately what matters is what can get through the House. Republican leaders there have remained adamant that they do not have the votes to increase anyone’s taxes.

It also comes as President Barack Obama moved aggressively Wednesday to put pressure on Republicans to agree that increased revenues have to be part of any deal to cut the deficit and increase the debt limit. Obama said he didn’t think Republicans could sustain their opposition to including revenue in a debt deal.

“I think it would be hard for the Republicans to stand there and say that, ‘The tax break for corporate jets is sufficiently important that we’re not willing to come to the table and get a deal done,’ or, ‘We’re so concerned about protecting oil and gas subsidies for oil companies that are making money hand over fist, that’s the reason we’re not going to come to a deal.’”

Obama also threw Republican requests for him to show leadership on the debt limit back at them, saying he had met with partisan caucuses in both chambers and Congressional leaders multiple times.

“At a certain point, they need to do their job, you know,” Obama said.

He also said Congress will have to start canceling its vacations if Members haven’t made significant progress by the end of this week. That had Senate Democrats and Republicans scrambling to see whether they could cancel at least part of next week’s planned July Fourth recess. A decision had not been made by press time.

Senate Minority Whip Jon Kyl (R-Ariz.) scoffed at Obama’s push to eliminate tax breaks for corporate jets: “If you’re having a conversation where you’re talking about something purely for political effect — corporate jets exclusion, which by the way they never raised with us — I ask you, is it serious or is it pure politics?”

Republicans are putting their energy into their proposal to amend the Constitution to cap spending and require a balanced budget. All 47 Senate Republicans back the plan, and McConnell said he hopes to force a vote after the July Fourth break.

Schumer ripped the idea.

“Practice what you preach,” he said, noting that House Budget Chairman Paul Ryan’s budget adds trillions to the deficit over the next decade. By the Wisconsin Republican’s own admission, it wouldn’t achieve a balanced budget before the late 2030s.

Amid the partisan sniping back and forth, Senate Budget Committee Democrats finally agreed on a budget blueprint. Chairman Kent Conrad (D-N.D.) declined to release details but said it could be unveiled next week — if the Senate stays in session.

Meredith Shiner contributed to this report.

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