US tax, spending deal meets resistance from lawmakers

By Richard Cowan and Susan Cornwell
Reuters

A deal to avoid a U.S. government shutdown met resistance on Wednesday from both conservative Republicans concerned about spending and House Democrats who complained about tax breaks and a planned end to a ban on U.S. oil exports.

But House of Representatives Speaker Paul Ryan said he was confident of a bipartisan compromise and that there is “no reason to believe we’re going to have a shutdown” of the federal government, which would hurt the U.S. economy.

The deal, reached late on Tuesday after weeks of wrangling, includes a $1.15 trillion U.S. government spending bill and a companion $650 billion package of tax breaks.

The Republican-controlled House will vote on extending the tax breaks for corporations and individuals on Thursday and the “omnibus” spending bill which would fund the U.S. government through September 2016, on Friday, lawmakers said.

Some Republican fiscal hawks balked at the funding bill, raising questions about the support for it in the House, although it was unclear whether conservatives had the votes or the inclination to push the country to a government shutdown.

The government last shut down in 2013 for more than two weeks due to a fight in Congress over the Obamacare healthcare program. Hundreds of thousands of federal workers were furloughed.

Representative Jim Jordan told Reuters the so-called Freedom Caucus and other conservative Republicans would vote against the current spending bill because it failed to include provisions to tighten U.S. screening of Syrian refugees, address national security concerns and deny funding to Planned Parenthood, a target of abortion rights opponents.

It also contained too many concessions to Democrats, he said. “The omnibus, I think, has real problems, not just with Freedom Caucus members, but with lots of Republicans,” Jordan said after meeting with colleagues.

The White House reacted positively to the deal, saying it met President Barack Obama’s priorities without including “hundreds of needless ideological” extra measures.

Historic oil accord

Lifting the prohibition on oil exports would be a historic move and a win for the U.S. oil industry and Republicans, who had argued that the ban was a relic of the 1970s Arab oil embargo. But with U.S. output now falling as oil prices slump, analysts say it could be months or years before exports flow in large volumes.

In a partial victory for Obama and other Democrats, the spending bill also includes granting tax incentives to boost wind and solar development, according to lawmakers involved in the talks. Shares of solar companies rose sharply.

But House Democratic leader Nancy Pelosi said she was concerned American oil refinery jobs could be lost by lifting the crude export ban.

“There are concerns we have about jobs, that jobs would leave the country because of lifting the ban on crude oil exports,” Pelosi told reporters. She said work needs to be done on the bill to protect those jobs.

She also cited worries about planned tax breaks, telling reporters they amounted to “practically an immorality.”

As often happens with “must-pass” legislation, lawmakers added in seemingly unrelated measures to the overall deal to increase their chances of approval in Congress.

Under changes to the “visa-waiver” program tucked into the spending bill, citizens of 38 countries, including many in Europe, will face new restrictions on travel to the United States. U.S. officials have been eyeing the program since last month’s Islamic State attacks in Paris.

Companies that share data with the U.S. government for cyber-security purposes will get more protection from consumer lawsuits.

The bill will also repeal U.S. meat labeling laws, removing the threat of retaliation by Canada and Mexico against $1 billion a year in U.S. exports.

But there was no financial bailout for Puerto Rico to ease its fiscal crisis, a failure that Pelosi also highlighted.

At the beginning of this year, Senate Majority Leader Mitch McConnell boasted of using the appropriations process to roll back major Obama administration environmental initiatives. But at year’s end, Republicans have fallen short of doing so.

Before Congress debates the long-term bills, it is expected on Wednesday to pass another stop-gap funding bill giving lawmakers until Dec. 22 to complete their work. Without the temporary measure, federal funding for a range of government programs expires at midnight on Wednesday.

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