Senate Easily Passes $1.1 Trillion Spending Bill

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Budget Battle
Susan Walsh/APSenate Majority Leader Harry Reid

By ANDREW TAYLOR

WASHINGTON — Congress sent President Barack Obama a $1.1 trillion government-wide spending bill Thursday, easing the harshest effects of last year’s automatic budget cuts after tea party critics chastened by October’s partial shutdown mounted only a faint protest.

The Senate voted 72-26 for the measure, which cleared the House a little more than 24 hours earlier on a similarly lopsided vote. Obama’s signature on the bill was expected in time to prevent any interruption in government funding Saturday at midnight.

The huge bill funds every agency of government, pairing increases for NASA and Army Corps of Engineers construction projects with cuts to the Internal Revenue Service and foreign aid. It pays for implementation of Obama’s health care law; a fight over implementing “Obamacare” sparked tea party Republicans to partially shut the government down for 16 days last October.

Also included is funding for tighter regulations on financial markets, but at levels lower than the president wanted.

The compromise-laden legislation reflects the realities of divided power in Washington and a desire by both Democrats and Republicans for an election-year respite after three years of budget wars that had Congress and the White House lurching from crisis to crisis. Both parties looked upon the measure as a way to ease automatic spending cuts that both the Pentagon and domestic agencies had to begin absorbing last year.

All 53 Democrats, two independents and 17 Republicans voted for the bill. The 26 votes against it were all cast by Republicans.

The measure advanced to Obama three months after House Republicans called off the government shutdown and sought a scaled-back bargain with Democratic lawmakers and the president.

It added the details to the framework laid out by the December bargain between the chairmen of the House and Senate Budget committees.

Congress still has to act in the next few weeks to increase the government’s borrowing cap to avoid a potentially devastating default on U.S. obligations, but GOP leaders no longer appear to have much enthusiasm for a showdown with Obama over that issue. House Speaker John Boehner, R-Ohio, told reporters Thursday that the government “shouldn’t even get close” to a default.

Obama’s budget director, Sylvia Mathews Burwell, called the spending bill’s passage a positive step for the nation and the economy. “It ensures the continuation of critical services the American people depend on,” she said in a blog post.

Shortly before the final vote, Sen. Ted Cruz, R-Texas, delivered a slashing attack on Senate Democrats, accusing them of ignoring the problems caused by the health care law. “It is abundantly clear that millions of Americans are being harmed right now by this failed law,” Cruz said.

Unlike last fall, when he spoke for 21 straight hours and helped force the government shutdown over defunding Obamacare, this time he clocked in at 17 minutes and simply asked the Senate to unanimously approve an amendment to strip out Obamacare funding. Democrats easily repelled the maneuver.

The 1582-page bill was really 12 bills wrapped into one in negotiations headed by Rep. Harold Rogers, R-Ky., and Sen. Barbara Mikulski, D-Md., respective chairmen of the House and Senate Appropriations committees, and their subcommittee lieutenants. They spent weeks hashing out line-by-line details of a broad two-year budget accord passed in December, the first since 2009.

The bill, which cleared the House on a vote of 359-67, increases spending by about $26 billion over fiscal 2013, with most of the increase going to domestic programs. Almost $9 billion in unrequested money for overseas military and diplomatic operations helps ease shortfalls in the Pentagon and foreign aid budgets.

The nuts-and-bolts culture of the appropriators is evident throughout the bill. Lower costs to replace screening equipment, for example, allowed for a cut to the Transportation Security Administration. Lawmakers blocked the Agriculture Department from closing six research facilities. And the Environmental Protection Agency is barred from issuing rules on methane emissions from large livestock operations. There’s money to modernize nuclear bombs, help with a Syrian refugee crisis and repair the iconic cast iron dome of the Capitol.

It cuts off funding for high-speed rail projects that Republicans think are expensive boondoggles and denies the Obama administration funding for International Monetary Fund reforms that would give emerging economies like China, India and Brazil more sway with IMF decisions.

Earmarks Targeted

Veterans’ programs get an almost 4 percent increase fueled by medical programs and a provision exempts that disabled veterans and surviving military spouses from a pension cut enacted last month. But Boehner signaled in a brief hallway conversation with The Associated Press that he would oppose a broader drive to repeal the entire pension provision, which saves $6 billion over the coming decade by reducing the annual cost-of-living adjustment for working age military retirees by 1 percentage point.

The bill adheres to Boehner’s edict against earmarks, the parochial provisions that used to carve out billions of dollars each year for lawmakers’ districts and states. Earmarks, which blossomed when Republicans controlled Congress over 1995-2006, had created a “pay-to-play” culture in which lobbyists and their business clients sometimes appeared to trade campaign money for government cash. Whether powerful lawmakers have used their influence more privately to sometimes achieve the same ends is an unanswered question in Washington.

The National Institutes of Health’s proposed budget of $29.9 billion falls short of the $31 billion budget it won when Democrats controlled Congress. Democrats did win a $100 million increase, to $600 million, for so-called TIGER grants for high-priority transportation infrastructure projects, a program that started with a 2009 economic stimulus bill.

Civilian federal workers would get their first pay hike in four years, a 1 percent cost-of-living increase. Democrats celebrated winning an addition $1 billion over last year for the Head Start early childhood education program and excluding from the bill a host of conservative policy “riders” advanced by the GOP.

Rogers won two provisions backed by the coal industry. One would block the EPA and Corps of Engineers from working on new rules on “fill material” related to the mountain top removal mining. Another would keep the door open for Export-Import Bank financing of coal power plants overseas.

Sen. Mike Lee, R-Utah, a tea party favorite who joined Cruz’ September filibuster, didn’t mention the measure’s funding of Obamacare in a floor speech earlier in the week; instead he complained at length that the measure dropped funding of a federal program that sends payments to Western states in which much of the land is owned by the federal government and therefore can’t be taxed by local governments.

  • The Aloha State legislature, in an effort to preserve the uniqueness of their island paradise, has an “Exceptional Tree” tax allowance. Landowners can deduct up to $3,000 from their income for expenses such as pruning and fertilization for any tree designated as rare, big, old or a combination thereof. That’s per tree. Top-bracket earners taxed at the state’s highest rate (11 percent) would save $330 via the deduction.

    The work must be done by a certified arborist, and the deduction can be claimed only every third year. The deduction was enacted in 2004. Hawaii has had a list of “Exceptional Trees” since 1975, and there are now estimated to be more than a thousand thus designated.

    Hawaii: That’s a Nice Tax Deduction You’ve Got Growing There

  • Maine legislators, a flinty bunch, don’t see the harm in taxing anyone who deals in their official state fruit — blueberries, at the rate of 1.5 cents per pound. The resulting revenues — more than $1.6 million to state coffers in the fiscal year that ended in June 2013 — are used to promote the crop and agricultural research.

    The state also taxes harvesters and processors of hard-shell clams (known in the state as mahogany quahogs) at $1.25 a bushel, but state revenues for that are much lower. The taxes are levied at the wholesale level, but naturally, they end up being passed on to the consumer.

    Maine: A Treasured (and Taxed) Fruit

  • The Yellow Hammer State is the last in the union to tax a deck of cards as if it were a “vice,” like alcohol and tobacco.

    Taxing decks of cards, associated with gambling, was once fairly common, but most states have since set up separate control boards to regulate liquor and tobacco, and have let the cards slide.

    But in Alabama, you’ll still pay a 10 cent sales tax on any pack of cards you purchase. Retailers also have to pay $2 to the state each year for the privilege of selling playing cards.

    Alabama: Ante Up for Playing Cards

  • “Merlyners” love their pollution-beleaguered Chesapeake Bay, the largest marine estuary in the U.S. In 2013, in part to meet federal pollution-control mandates, Free State legislators enacted fees on property owners in Baltimore and nine other Maryland counties, aimed at curbing storm water runoff. The fees were meant to fund programs to improve the water quality of the Bay.

    Sounds simple enough, but the way Maryland legislators wrote the law has led to an angry backlash in some corners against this so-called “Rain Tax.”

    One way localities can calculate the tax is by measuring how much of a landowner’s tract is “impervious” to precipitation seeping into the ground. So the more you’ve developed it with buildings, driveways, tennis courts and the like, the less it will absorb and the more you pay. That’s how the tax is being implemented (through aerial and satellite photos) in Montgomery County, Md., a heavily developed suburb of Washington, D.C., and landowners are up in arms.

    Other counties have rebelled, opting to pay for the pollution control programs out of general funds rather than pass the cost onto landowners. Maryland’s Republican candidate for governor, David Craig, has made the law’s repeal part of his platform for the 2014 election.

    Maryland: Who’ll Tax the Rain?

  • The Sunflower State is among a bevy of jurisdictions that allows sale of lower-alcohol beer (the term of art is “cereal malt beverage”) in convenience and grocery stores.

    But Kansas also taxes “3.2” beer differently—and there lies the rub. At a liquor store, all products, including, say, a conventional six-pack of Budweiser (with 5 percent alcohol by volume), are taxed at a special rate of 8 percent. At the convenience store down the street, however, ordinary sales tax is levied on the lower-alcohol, cereal malt beverage bottle of Bud. That often ends up being more than the 8 percent alcohol tax. In Pomona, Kans., for example, the effective rate on the weaker beer would be 9.7 percent. Go figure.

    Kansas: Weaker Beer, Higher Tax?

  • When it comes to taxation, the rule is generally the stronger the booze, the higher the tax (that’s why Kansas’s beer tax scheme is an anomaly). California follows that curve, but at 100 proof, you better be ready to pay through the nose.

    Distilled spirits are taxed at $3.30 a gallon if below 100 proof, or 50 percent alcohol. Go over that, like with Bacardi 151, and the tax doubles to $6.60. Maryland also notes the 100 proof point, but it only adds 1.5 cents per proof, per gallon to the relatively modest liquor tax of $1.50 per gallon, taking the Bacardi 151 to $2.27 per gallon.

    California: Paying for Proof

  • Entertainment venues pay a business tax to the Silver State ranging from 5  to 10 percent on admissions fees (and food, drink and merchandise sales) whenever there’s live entertainment going on.

    There are exemptions, however, including this one, for businesses that provide ” … Instrumental or vocal music, which may or may not be supplemented with commentary by the musicians, in a restaurant, lounge or similar area if such music does not routinely rise to the volume that interferes with casual conversation and if such music would not generally cause patrons to watch as well as listen.”

    So your piano player can play “Feelings” softly and even crack a few jokes, tax-free, for your business. Just make sure they’re not funny enough to attract attention.

    Nevada: The Softer the Music, the Lower the Taxes

  • Want to own a plush or fuel-thirsty ride? That’ll cost you extra in the Garden State.

    Cars that cost $45,000 or more or have a combined EPA fuel-mileage average of 19 or below pay an additional 0.4 percent on top of New Jersey’s 7 percent sales tax.

    New Jersey: $100K Mercedes = $400 More Tax

  • Businesses in D.C. that sell food or alcohol are required to charge customers 5 cents for every paper or plastic disposable bag they take. The store gets to keep a penny, and the balance goes to a government fund dedicated to cleaning up the Anacostia River.

    Consumers and storekeepers grumbled at the program’s debut in 2010. It has raised about $7 million so far, below expectations, but the program’s designers see this as a positive sign — that shoppers have opted to bring their own reusable bags.

    District of Columbia: We’ll Tax That Shopping Bag

  • In the Land of Enchantment, making it to 100 years has a payoff beyond the chance that Willard Scott will wish you a happy birthday: You don’t have to pay state income tax anymore.

    If you’ve been physically present in the state for at least six months and a resident of the state on the last day of the year, and you’re not someone’s dependent, you’re eligible. You’ll still need to file, and there are some complications if you’re married and your spouse doesn’t qualify.

    New Mexico: It Pays to Be a Centenarian

  • More on Taxes from Kiplinger

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