The tax-cut-extension bill set for the Senate floor this week highlights a longstanding fissure between Grover Norquist's Americans for Tax Reform and the Club for Growth.
The dispute comes down to this: The club would rather see the entire extenders package disappear — and thus see higher revenue flowing to the government, at least in the short-term — because it believes that many of the provisions are anti-growth and would harm the economy in the long run. For Norquist's ATR, lower revenue is the top priority.
The two groups have faced off in the past — on a repeal of an ethanol tax break that would have violated ATR's no-tax pledge , and on broader strategy, with the club nearly always opposing major budget legislation that has reached President Barack Obama's desk, while Norquist has often supported the deals cut by GOP leadership. The club has already issued a key vote alert against the Senate package that would resurrect more than 50 lapsed tax cuts, ranging from those as narrow as the accelerated depreciation schedule for thoroughbred racehorses to state and local sales tax deductions .
"This bill is mainly a hodge-podge of special interest earmarks in the federal tax code. Thankfully, these extenders expired at the end of 2013, so the best thing the Senate can do now is nothing," the Club for Growth said. "Majority Leader Harry Reid should cancel consideration of this bill and instead call for broad, pro-growth tax reform that will lower rates and remove other burdensome carve-outs in the tax code."
Oddly enough, since the so-called "extenders" have already lapsed, they technically constitute new tax cuts at this point.
Americans for Tax Reform has rejected the idea that the Senate would be better off taking no action.
Ryan Ellis, ATR's tax policy director, in a Monday blog post highlighted support for an amendment process that would permit targeted elimination of some of the tax provisions, but not all of them.
"Amendments to remove tax policies which should not be allowed to continue (as opposed to pro-growth tax relief, which should continue) should be made in order. ATR is concerned that to date, many conservatives have been deeply confused on this distinction. We have heard green energy tax credits mentioned in the same breath as accelerated depreciation, for example," he wrote. "We would urge senators considering amendments to be careful about throwing out the pro-growth baby with the crony capitalist bathwater."
Majority Leader Harry Reid, D-Nev., had not made any announcements Monday about the path forward for the extenders bill and if he would lock down the process to preclude the offering of amendments.
Finance Chairman Ron Wyden has said this two-year extenders package would be the only such measure to move on his watch, with the Oregon Democrat having an eye on the long-elusive first overhaul of the tax code since 1986. An administration official told CQ Roll Call last week that "our position remains unchanged and we continue to believe the extenders should be paid for," though there has been no veto threat made against the Senate bill.
The Obama administration did threaten a veto of House legislation that would make the research and development tax credit permanent, citing budget effects. ATR backed the House's research and development bill, while the Club for Growth did not key vote against it, although club president Chris Chocola wrote an opinion piece in the Wall Street Journal last month urging that Congress leave even that tax break expired.
Barney Keller, the group's spokesman, said that was because the club believes that an extension bill will most likely be the path forward for extenders and therefore was the focus of their efforts.
"Everybody knows what the final piece of legislation is going to look like and we've made our position on that clear. So we've key voted against the [Senate bill] and we'll take a look at what ever else get's brought up in Congress, but we don't feel like we have to score every vote," Keller said.
A key vote against a $156 billion tax cut presumably also would have been unpopular with the club's allies in the House. Only one Republican voted against the bill — John Campbell of California.
On balance, ATR said the Senate's two-year extenders should be allowed to move through the Senate, "warts and all."
"Ideally, the best of these tax relief items would be made permanent law, and the rest would be plowed into pro-growth tax reform," Ellis said. "For now, though, the mandate for the Senate is clear: do no harm."