Letting Congress Be Congress: Obama’s Same Old Strategy

President Obama will take to the airwaves tonight to pitch the economic recovery bill to the people — and he’ll have his work cut out for him.

What becomes more apparent with each passing day in Washington is that the change in administrations has changed little about Congress’ standard operating procedure, the wheeling and dealing that inspired Otto von Bismarck’s famous quote about lawmaking and sausage-making.

Exhibit A: the business tax breaks in the Senate version of the stimulus bill.Under the Senate bill, businesses would be allowed to use general energy credits to offset 100% of their income tax liability for this year and next year. That’s a major change from current law, which allows general energy credits to defray only 25% of a company’s tax bill. Giving businesses a complete tax holiday to entice them into energy investment doesn’t sound like a bad thing on its face — but should bailed-out banks get that benefit when they still refuse to lend at a pace that would help mend the economy?

As the lobbying firm McDermott Will & Emery noted in its report on the stimulus tax breaks:

Importantly, this [tax break] could potentially attract TARP recipients, who have limited 2009 tax attributes, to participate as tax equity investors in renewable energy projects.

Another business tax break that’s looking more and more likely on the stimulus is repatriation, which would slice corporate tax rates from 35% to 5.25% for companies declaring their overseas profits on U.S. tax forms. Repatriation supporters are discussing how to impose “strict conditions” on corporations’ use of repatriated cash, which sounds great. But why would Congress legislate a new version of a tax cut currently being investigated for misuse by one of its own committees?

The answer: It’s just how Congress works. Senate Finance Committee Chairman Max Baucus (D-MT), who led the drafting of the tax-cut portion of the stimulus, has a reputation for working alongside Republicans on provisions that the business lobby finds amenable. That Baucus is supporting generous benefits for K Street players isn’t really shocking.

What I’d like to know is whether the president is making any private attempts to change the old sausage-making modus operandi of his colleagues — because it’s not happening in public yet. And if it’s happening in private, it hasn’t worked yet.

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