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U.S. Congress Passes Major Tax, Trade Bill

WASHINGTON--The U.S. Congress, frustrated by partisanship and criticized for its meager record of accomplishment, ended with flurry of bill-passing and promises of change when Democrats take over the House and Senate in January.

As often is the case in the waning hours, the congressional session ended with a mad rush to deal with untended business.

The two chambers passed a massive tax and trade bill, prevented the government from shutting down and approved dozens of other bills. They included an important fisheries management measure; a bill allowing civilian nuclear technology transfers to India; and bills to fund programs to combat AIDS, pandemic diseases and premature births.

The tax measure revived some 20 tax breaks, at a cost of $38 billion over five years, and a dozen credits promoting alternative and efficient uses of energy.

It extended through the end of 2007 a deduction for research and development initiatives, and renewed a deductions of up to $4,000 for higher education costs. There were breaks for teachers who pay for supplies out of their own pocket and for taxpayers in nine states with no income taxes--allowing them to deduct state and local sales taxes.

"All Americans should be treated equally and given the opportunity to deduct their state taxes, regardless of how those levies are assessed," said GOP Sen. Kay Bailey Hutchison of Texas. In her state, which lacks a state income tax, sales tax deductions are worth some $1 billion.

The popular tax breaks became a magnet for contentious and expensive bills. The package included legislation to open up 8.3 million acres in the Gulf of Mexico to oil and gas drilling and to prevent a 5 percent cut in Medicare payments to doctors from taking effect Jan. 1. The GOP-crafted solution to the problem was criticized as an accounting gimmick because it would double the cost of fixing the problem again next year.

The legislation also contained measures to permanently normalize trade with Vietnam and extend trade benefits for four Andean nations, sub-Saharan African countries and Haiti. The Haiti act was the toughest to swallow for some lawmakers from the South; they said it would further erode jobs in their states' textile industries.

The bill also renewed, with increased federal contributions, a program dealing with abandoned coal mines and the health issues of former miners.

Senate Budget Committee Chairman Judd Gregg, R-N.H., said the legislation would shift $4 billion in health care costs from the coal companies to the taxpayers, and criticized his own party for failing to check indiscriminate federal spending. "We're supposed to be the party of fiscal discipline and we haven't been," he said.

As one of its final acts, Congress approved a stopgap measure keeping federal programs running at or slightly below current levels through Feb. 15. President Bush quickly signed it on Saturday.

The action was necessary because lawmakers failed to pass the annual spending bills covering the budget year that began Oct. 1, except those dealing with defense and homeland security.

Republicans claim some major accomplishments this year: passing a pension overhaul; renewing the Patriot Act; enacting a port security bill; and endorsing Bush's plans to create military commissions to prosecute suspected terrorists.

But this Congress could not move ahead on promised lobbying and ethics changes; failed to reach a consensus on the administration's warrantless eavesdropping program; and did not develop a plan to deal with the 12 million illegal immigrants in the country.