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Pet projects and extra tax measures find their way into ‘fiscal cliff’ deal

The dome is seen through the sky-light of the Capitol Visitor Center at the U.S. Capitol in Washington January 1, 2013.


The U.S. Senate packed an eclectic mix of handouts and take-backs into its last-minute deal to avoid the so-called "fiscal cliff," including a measure to repeal part of President Barack Obama's signature health-care overhaul and a string of special interest tax breaks.

At the centre of the 157-page bill adopted early Tuesday are provisions to raise taxes on the wealthiest households and to make permanent Bush-era tax cuts for the middle class.

But senators also extended higher rum excise taxes to Puerto Rico and the U.S. Virgin Islands and provided tax breaks to a wide range of other groups and interests, including motorsports entertainment complexes and mine-rescue teams.

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Among the other sweeteners include special expensing rules for certain film and TV productions; tax-exempt financing for New York Liberty Zone, an area around the site of the World Trade Center; and an extension of American Samoa economic development credit.

Congressional lawmakers often insert pet projects and other unrelated provisions into major "must do" bills in the last days of a legislative session, when it is more likely that quick passage will occur.

Green energy was another big winner in the bill. Roughly a dozen provisions would extend credits and incentives for plug-in electric vehicles, energy-efficient appliances, biodiesel and renewable diesel, and other alternative energy initiatives.

The legislation also would kill the part of Obama's 2010 Affordable Care Act designed to let millions of elderly and disabled people get help at home rather than be placed in institutional care, which tends to be more expensive.

Democrats acknowledge that the insurance initiative known as the Community Living Assistance Services and Support program, or CLASS, is financially flawed but they had argued it should be fixed rather than ended.

The House voted to repeal that provision 11 months ago.

Also tucked in the bill, known as the American Taxpayer Relief Act of 2012, are measures to avert the so-called "dairy cliff" – a steep increase in milk prices that would otherwise take place this year.

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The measures would extend farm subsidy programs and prevent dairy subsidies from reverting to 1949 levels, which would have meant retail milk prices could have doubled to about $7 a U.S. gallon.

One thing lawmakers did not slide into the legislation: a raise for themselves. The Senate bill says members of Congress will get no cost-of-living adjustment in their pay for fiscal year 2013.

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