|"Only dull people are brilliant at breakfast"
|"The liberal soul shall be made fat, and he that watereth, shall be watered also himself."
-- Proverbs 11:25
Senate Democrats, who are desperate to stimulate the economy but don’t have the money to pass traditional stimulus legislation, will turn to cutting business taxes when they return to Washington this fall.
In doing so, they will try to drive a wedge between business interests and the GOP leadership, who has tried to block almost every element of the Democratic agenda, by pushing a round of corporate tax breaks, say Senate Democratic aides.
The strategy has appeal on two grounds.
The legislation would stimulate the economy at a time when many economists argue the government must step in to revive demand despite it not being politically feasible to pass traditional infrastructure spending bills. It would also force Republican leaders to either endorse the Democratic agenda or block proposals that are popular among corporate leaders and domestic manufacturers.
But the plan is not without pitfalls. Democratic leaders could find centrists and liberals within their caucus divided over how to structure the tax cuts and whether they must be paired with infrastructure spending programs, as some liberals might demand.
Democrats have found themselves at odds with the business lobby for much of their reign in the majority, fighting over healthcare, cap-and-trade and other regulations. And they were disappointed businesses did little to help them in their standoff with House Republicans over raising the debt limit, even though business leaders saw the mere threat of a default as dangerous.
Their new plan could net them the support of groups like the U.S. Chamber of Commerce, which traditionally supports Republicans — both politically and financially.
Their first tax proposal is to make the corporate research and development tax credit permanent. The second is to pass an Advanced Energy Manufacturing Tax Credit. This would create a 30 percent tax credit for companies that manufacture new clean-energy technologies, which Democratic aides say would help create thousands of new jobs around the country.
A third idea is to extend the payroll tax cut Congress enacted in December and expand it to employers, reducing the cost of labor. And a fourth option is to give employers tax breaks for hiring new employees, an idea Democratic members of the Senate Finance Committee panned in 2009 but now seems more attractive.