Senate Dems looking to rework 3 percent repeal

November 4, 2011

The Hill

By Bernie Becker and Vicki Needham

Senate Democrats don’t appear to be too keen on how a House-passed measure would pay for the repeal of a provision requiring governments to withhold 3 percent of certain payments from contractors.

Sen. Richard Durbin of Illinois, the chamber’s No. 2 Democrat, told reporters Thursday that his caucus was looking for different ways to pay for the repeal and suggested that a vote on an altered proposal could come next week.

The business community and Republicans have been pressing Senate Democrats to take up and approve the House measure, which would use an offset strengthening Medicaid requirements.

But while that approach has been backed by the Obama administration, top Democrats like Senate Majority Leader Harry Reid of Nevada and Sen. Max Baucus of Montana, the Finance Committee chairman, have not rushed to embrace the House-approved offset. In recent weeks, Reid has discussed other ways to pay for repeal, including a scenario that would rely in part on rolling back a tax break for corporate jet owners that was frequently discussed during this summer’s debt-ceiling negotiations.

Repealing the 3 percent rule would keep the Treasury from collecting roughly $11 billion over a decade. The regulation, which has been delayed a couple of times and is currently scheduled to go into effect in 2013, was enacted more than five years ago to battle tax cheating among contractors.

Reid also said this week that he wanted to amend the House measure to ensure that contractors who are evading their taxes don’t benefit from repeal.

Republicans from both chambers and groups like the U.S. Chamber of Commerce have noted the White House’s support for the House plan in lobbying the Senate to act.

President Obama’s endorsement of the House approach came after he proposed delaying the rule for a year in his $447 billion jobs package.

GOP lawmakers have also said that amending the House bill in the Senate could impede the measure’s momentum.

“Instead of waiting for more ‘stimulus’ bills that face bipartisan opposition, the Senate should work with the House to pass the jobs bills like this one that are supported by both parties,” Rep. Wally Herger (R-Calif.), who introduced the House repeal measure, said on the chamber floor on Thursday.

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