Senators won’t “pay-go” and the House won’t omnibus… It’s up to a Finance Committee

The Senate recently passed short-term extensions for clean energy tax incentives that will be set in provisions for the new housing bill. After adding the extensions, the Senate then went on to pass the housing bill with a convincing majority that has environmentalists hopeful that this piece of legislation might actually make it to the president’s desk before being killed in either the House or the Conference committee. The extensions provide for a continuance of production tax credit for wind power, investment tax credit for solar energy, and several other incentives for energy efficiency.
The passing of the bill and its added incentives proves to be a positive environmental move that demonstrates bipartisan support and urgency for such matters. It is the first time that the Senate has approved any kind of extension for the clean energy incentives and although the eventual effect may be mitigated in conference committee and in negotiation with the president, it shows that Congress is beginning to develop a priority around dealing with environmental policies. One concern about the bill’s success comes from the necessity for the House and Senate to agree on their differences (something that has traditionally not been accomplished).
In the past, the House has passed several year or longer extensions, but they have not gotten through the Senate. Now the Senate has passed its own set of extensions, but the House is skeptical about passing the Senate’s version. When the House created extension legislation, they used the Democrat’s “pay-go” policy that requires spending to be met with equal cuts in other areas. The proposed cuts of 13 billion would have come from the .5 trillion dollar Oil Profits, but Republican senators felt that asking the Oil industries to give up this profit was “just too much to ask”. As a result, this House version was filibustered and killed in the Senate. The Senate’s reply to the Democratic pay-go idea came in an attempt to sidestep the pay-go policy. Republican Senators attempted to attach their version of the extensions (which were almost exactly the same as the House extensions) onto the economic stimulus package in order to avoid using oil profits, but this method also failed when the votes came in.
Currently, the housing and incentive extensions legislation that has made it through the Senate and is now in the House is being supported by speaker Nancy Pelosi. Having recently passed the 17 billion dollar clean energy package that was stopped in the Senate because of the legislation’s impact on oil profits, Pelosi feels that the House will be ready to accept similar legislation from the Senate, if the Senate can provide an alternative means for funding. The problem now lies not in deciding what extensions to provide (both the House and Senate had proposed similar legislation), but how to fund the proposals. The Senate does not wish to accept pay-go policies that will take funds from other areas, and the House does not wish to accept the Senate’s attempts to create omnibus legislation.
The recent attaching of the extensions onto the housing bill also creates a problem for the Senate and House because of their different policy priorities on housing. While the House wants to establish policy around the needs of homeowners, the Senate is focusing predominantly on the housing industry as a whole. This difference of loyalty will have to be smoothed out in a conference committee and could potentially lead to another delay or even another termination of the legislation.
One potential solution could come from the Senate Finance Committee whose democratic chairman is planning a proposed 50 billion plan that would extend expired and about-to-expire programs. The benefit of his proposal would be complete prior funding, which would give Republican Senators little to complain about. Even if this legislation does not pass, several lobbyist groups, including the Sierra Club, NRDC, Wal-Mart, and the National Association of Home Builders have promised to continue pressuring legislators until some form of policy change is sent to the president.