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A cliff that keeps on giving

Congress | A deadline intended to prompt savings in Washington ends up costing more and piling on the pork

Issue: "Roe v. Wade turns 40," Jan. 26, 2013

WASHINGTON—Remember when then–House Speaker Nancy Pelosi remarked in March 2010, during the height of the healthcare debate, “We have to pass the bill so that you can find out what is in it?”

Congress has done it again. This time it was last-minute legislation to avert the Jan. 1 combination of scheduled tax increases and spending cuts dubbed the “fiscal cliff” by anxious economists.

The New Year’s Day deal did little to pay down the deficit (the whole point of the fiscal cliff). Instead, the legislation raised taxes on 77 percent of U.S. households (at an average of $1,257 per filer) while adding nearly $4 trillion to the federal deficit over the next decade. It also postponed decisions on any real cuts to federal spending for at least two more months.

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But there’s more: Now that the bill has passed, we are indeed finding out what is in it. The bill’s 150-plus pages include billions in post-Christmas stocking stuffers for special interests.

Hollywood will get a $430 million tax break for filming productions in the United States. NASCAR will see $70 million in exemptions for race track facilities. The railroad industry will be able to claim $331 million in tax credits for track maintenance. And rum producers in Puerto Rico and the Virgin Islands will get $222 million in returned excise taxes. There’s also a $15 million tax break for the nation’s asparagus growers.  

In total, the federal government will forgo about $67.9 billion in corporate tax revenue for 2013 alone. Some of these corporate tax breaks last for 10 years (by then many of these industries will dispatch cash and lobbyists to Washington to ensure an extension).

The green energy industry also got in on Washington’s generosity. Algae growers producing certain biofuels are getting $59 million in tax perks while the world of plug-in vehicles (such as electric motorcycles) will see $7 million in incentives.

But the prize for most effective lobbying goes to the wind energy industry. That group grabbed a credit that will cost a whopping $12 billion over 10 years. What’s more, they secured a key rule change. Such breaks had been available only for functioning wind farms. But now access to the credits will be extended to any wind project that breaks ground in 2013. If you shovel dirt over a proposed wind farm over the next 12 months you are eligible to claim the credits for the next decade. Other renewable energy construction projects, such as geothermal and hydropower generation, also may qualify.

The fiscal deal and its add-ons are a big reason why disenchanted fiscal conservatives in the House came five votes shy of forcing a second ballot in the reelection of John Boehner as House speaker. Boehner survived, but not without facing the most defections of any sitting speaker in more than two decades.

“It’s hard to think of anything that could feed the cynicism of the American people more than larding up must-pass emergency legislation with giveaways to special interests and campaign contributors,” Sen. John McCain said.

In a classic example of Washington’s twisted logic, McCain voted for the fiscal cliff deal before criticizing it.

Edward Lee Pitts
Edward Lee Pitts

Lee is WORLD's Washington Bureau chief. As a reporter for the Chattanooga Times Free Press, he was embedded with a National Guard unit in Iraq. He also once worked in the press office of Sen. Lamar Alexander.

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