Republicans press sprawling tax, trade, Medicare legislation as Congress nears end

Thursday, December 7th 2006, 6:23 am

By: News On 6

WASHINGTON (AP) _ Lawmakers on Thursday pieced together legislation extending popular tax breaks and saving doctors from a cut in Medicare payments as Republicans prepared to cede control of Congress to the Democrats.

The legislation also contained several trade-related measures, including extending normal trade status to Vietnam.

House GOP leaders exiting power delayed a Thursday vote but did not immediately say why. In the Senate, GOP leaders were experiencing lingering unhappiness with the bill from several GOP senators, especially over extending trade benefits for textile exports from Haiti.

Action on the tax and trade legislation and a subsequent vote on a bill to keep the government running through Feb. 15 were the chief obstacles to concluding the turbulent 109th congressional session.

It was hardly the first time the GOP-controlled Congress had employed a secretive, closed-door process to assemble important legislation. Still, Democrats supported the contents of the bill _ if not the way it was put together.

"This is not a perfect bill, but it renews tax cuts Americans need right now, like the college tuition deduction, and makes sure that Medicare and Medicaid patients will have access to care next year," said Sen. Max Baucus of Montana, top Democrat on the Finance Committee.

But the massive measure _ containing much to please lawmakers and their constituents _ also generated opposition. Sen. Judd Gregg, R-N.H., for example, was unhappy about its cost and a multibillion-dollar move to expand health care for retired coal miners.

Under Senate rules, a single senator can force considerable delay once a bill comes over from the House.

"It's no better than 50-50 right now," Senate Minority Leader Harry Reid, D-Nev., said Thursday afternoon. Prospects among Senate Democrats improved; but the House, for reasons not altogether clear, went in to a recess that lasted more than five hours.

Lawmakers from states such as Georgia, Illinois and Massachusetts were unhappy that House Republicans cut out a plan to ease looming budget shortfalls in a federal-state program providing health insurance coverage to low-income children. And New Yorkers seethed after Republicans dropped tax incentives for a rail link from Manhattan to Kennedy Airport.

At the same time, lawmakers were generous with tax-free health-savings accounts used chiefly by higher-income taxpayers, increasing contribution limits at a cost of $1 billion over the next decade.

Democrats mostly went along with extending expired tax breaks. They include a research and development tax credit, worth $16.5 billion, and a sales tax deduction for people in states without income taxes, at a cost of $5.5 billion. All told, the tax cuts would cost $38 billion over five years.

Also driving the massive bill forward was an effort to forestall a 5 percent cut in Medicare payments to doctors and a plan to open more than 8 million acres along the Gulf of Mexico to oil and gas drilling.

But Democrats criticized Republicans for giving up on legislation funding more than $460 billion in unfinished agency budgets, requiring passage of a third stopgap spending bill to keep the government running.

The House and Senate planned votes Friday to avoid a government shutdown.

Government agencies, except for the Defense and Homeland Security departments, have been on autopilot at or below 2006 budget levels since the new spending year began Oct. 1.

The clampdown is affecting agencies such as Veterans Affairs, which would receive a $3.1 billion influx for medical care under its moribund budget bill. Lawmakers promised the VA would get more flexibility to work around the problem, but veterans groups are upset.

Democrats are unhappy that the budget mess is being dropped in their laps next year, when it promises to clutter their early agenda as the new majority.

"They are going to leave a mess as they go out," said Speaker-to-be Nancy Pelosi, D-Calif. "It's been a do-nothing Congress, and as they go out the door, they are going to validate the decision of the American people that change was necessary."

Besides the sales tax and research tax breaks, the tax and trade legislation would extend:

_ A tax deduction on college tuition.

_ A tax credit for hiring welfare recipients and others facing hardships finding jobs.

_ Tax credits for alternative energy producers and purchases of solar energy equipment by homeowners and businesses.

The breaks are supported by both parties. But efforts to extend them have been thwarted by moves to link them to other, more contentious bills. They include trade legislation affecting textile imports from Haiti and an abandoned coal mine reclamation program, estimated to cost up to $5 billion over 10 years.

The Vietnam bill would end the Cold War requirement that trade with the communist state be reviewed every year. While supported by the Bush administration, the proposal has run into opposition from critics of Vietnam's human rights record and those worried about the impact on American jobs.

The trade package also would extend or expand trade breaks for Haiti, sub-Saharan Africa and Andean nations, again drawing opposition from supporters of the beleaguered U.S. textile industry.

Also still on the agenda was congressional approval of an agreement with India that would allow the United States to ship civilian nuclear fuel and technology to that country.