Levin: NAM Should Help Enable Swift Passage of Tax Extender Bill in Senate
WASHINGTON, D.C. —Recently, National Association of Manufacturers (NAM) President John Engler commented on "extenders" legislation currently being considered in Congress, including a provision to extend the research and development (R&D) tax credit. In response to those comments, U.S. Representative Sander Levin (D-MI), a senior member of the Ways and Means Committee and author of legislation to expand and make the R&D credit permanent, today sent the following letter to Governor Engler:
June 24, 2008
The Honorable John Engler
National Association of Manufacturers
1331 Pennsylvania Ave., NW
Washington, DC 20004-1790
Dear Governor Engler:
As you know, many of us in Congress have long worked to support American manufacturing. I am proud to have for a long time endeavored on a bi-partisan basis to strengthen and to make permanent the R&D Tax Credit because it is so critical to the competitiveness of our manufacturing sector.
NAM has been amongst the steadfast supporters of the R&D Tax Credit in previous efforts in Congress. A strong R&D Credit is vital to that manufacturing base.
As a result, I was surprised and disappointed by your comments reported in today's CongressDailyAM, and let me indicate why with respect to each of the points you raise.
1. You are quoted as saying: "I don't think they understand the damage they're doing to our image and reputation… [P]eople who are in manufacturing…just shake their head and say ‘Can't they get anything done?'"
I would point out that the House of Representatives has passed extenders legislation twice during the 110th Congress, legislation that has subsequently been blocked by the minority in the Senate.
2. You suggest that that the offsets in the most recent extenders bill are a "slippery-slope" for even more unfriendly offsets later. You are further quoted as saying, "if that one got done, it probably wouldn't be all bad, but it's just a question of, from our standpoint on this issue, you're in for a dime, in for a dollar…because the next one" could be much worse.
"Slippery-slope" is a lame argument against these justified offsets. The real slippery slope is passing bills without concern for the spiraling deficit. It should be no surprise the House is insisting that tax legislation be fully offset. With the national debt at over $9.5 trillion and the annual cost of interest on that debt approaching $300 billion, it is critical that we extend these tax incentives in a fiscally responsible manner.
3. The articles indicates that you said "pay/go should not even apply to the R&D credit, which was written into the tax code in the 1980s before the advent of pay/go," and that "as long as Congress must abide by it…spending on entitlement programs should be trimmed."
Suggesting that PAYGO budget rules should not apply to the R&D Credit because it was first enacted in the 1980s is misleading and ignores the reality that in many years Congress passed extenders and other legislation with offsets. If it were truly the case that extending current law did not come with a fiscal consequence, why did some previous Congress not simply make all the extenders permanent?
Further, to suggest that Congress only use offsets that impose cuts in entitlement spending would seem to reflect an ideological preference rather than important interests of numerous NAM members. In your comments today, you acknowledge that the offsets proposed by the House are relatively non-controversial. I expect that few, if any, manufacturers would be affected by them. Opposing offsets based on ideology rather than substance represents a direct threat to our ability to extend the R&D Credit in a timely fashion.
4. Finally, you are quoted as saying, "[S]omething like an R&D tax credit just so strongly is on the part of the ledger that says if we invest here, it's going to pay off down the road."
This appears to be an argument in favor of so-called "dynamic scoring." The reality is that Congress does not use dynamic scoring and the current administration's Treasury Department acknowledges that tax cuts do not pay for themselves. Extending even existing tax law without offsets does increase the deficit, by almost $9 billion in the case of a one year R&D extension.
On June 12, 2008, 218 Members of the House Majority signed a letter to Senator Reid indicating that any extenders bill must be paid for under House rules. Since then that position has been consistently restated by House Majority leadership.
As both of us were born and raised and have been active in industrial Michigan, we know that the work on research in our manufacturing base has been vital for research and development in our state and throughout the nation, and that the support of the R&D Tax Credit has been vital for our manufacturers and their workforce.
As a result, it is critical for NAM to work for continuation of the R&D Tax Credit on a bi-partisan basis by helping to bring about quick action in the Senate on H.R. 6049, rather than reiterating misguided approaches often put forth by the White House. I urge that it is the only way we will get the job done on extending the vital R&D Tax Credit. Anything else will be counter-productive for members of NAM and for the manufacturing base of our state and nation.
Sincerely,
Sander Levin
Member of Congress
Please click here to view a summary of the tax extenders bill, H.R. 6049.
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