Senate makes deal to pass corporate tax legislation

WASHINGTON -- The Senate, after a weekend of behind-the-scenes negotiations, struck a deal to allow passage of a sweeping corporate tax bill and spending measures for disaster relief and homeland security.\nThe agreement clears the way for the Senate to adjourn on Monday and hit the campaign trail following the lead of the House, which left town on Saturday until after the Nov. 2 elections.\nThe Senate's adjournment had been held up by Sens. Mary Landrieu, D-La.; Tom Harkin, D-Iowa, and Edward Kennedy, D-Mass., to protect measures that had been left out of the corporate tax bill, and in Harkin's case, a cut in spending for a farm conservation program.\nIn the settlement, the three senators will get mostly symbolic votes in which the Senate will reaffirm positions it has taken in the past, but which have been opposed by House Republican leaders.\nMajority Leader Bill Frist, R-Tenn., announced the deal late Sunday night, after the Senate had been in session through the weekend as leaders of both parties tried to work out some sort of compromise. Minority Leader Tom Daschle, D-S.D., acknowledged that tempers had frayed, saying "this has been a very difficult and trying time for the entire Senate."\nThe objections of Landrieu, a strong defender of the military, had held up a vote on one of the biggest bills to move through this soon-to-end session of Congress -- a sweeping overhaul of corporate taxes with some $136 billion in tax breaks for manufacturers and others.\nThe agreement called for the Senate on Monday to vote first on the corporate tax bill. This would be followed by votes on a $33 billion measure to fund Homeland Security Department programs and a spending bill that includes $14.5 billion in relief for hurricane victims and Plains farmers suffering from years of drought.\nHarkin held up action on the hurricane aid, attached to a $10 billion military construction spending bill, to protest the decision to pay for the $2.9 billion in drought relief by cutting a farm conservation program that he has championed.\nThe hurricane money, intended mostly for the election battleground state of Florida, is not budgeted and will increase the federal deficit.\nLandrieu won agreement for a vote on a measure giving a 50 percent tax credit to employers who compensate workers up to $30,000 in lost pay when military reservists or National Guard members are called to active duty. It was estimated to have a $2.5 billion cost over 10 years.\nHer proposal had been in the Senate version of the corporate tax bill but was taken out when House Republicans opposed it. Given that opposition, it was unlikely to win House passage.\nHarkin gets a vote Monday on a Senate resolution to instruct members of an upcoming budget conference committee that the Senate wants funding restored for the agriculture conservation program.\nThe corporate tax bill grew out of the need for Congress to respond to a World Trade Organization ruling that a $5 billion annual subsidy for U.S. exporters was illegal. As a result, 1,600 American exports to Europe are being hit by penalty tariffs that now stand at 12 percent and are rising by one percentage point a month.\nThe bill became the vehicle for the most significant overhaul of corporate tax law in nearly two decades. It includes $76.5 billion in new tax relief for the manufacturing sector, which was broadly defined to include oil and gas producers, architectural and engineering firms and film and music companies.\nThe package also provides benefits for a wide range of groups, from native Alaskan whalers, importers of Chinese ceiling fans, NASCAR race track owners and residents of states without state income taxes, who would be able to deduct state and local sales taxes from their federal tax returns.\nThe measure includes a $10.1 billion buyout for tobacco farmers. Several senators from both parties objected strenuously that the final version of the bill drops Senate-approved language that would give the Food and Drug Administration the power to regulate tobacco.\nThe Senate late Sunday approved two measures pushed by Kennedy and Harkin to reassert FDA authority over tobacco and to ban implementation of new Bush administration rules that critics say will deny overtime pay to millions of workers. Both proposals are unlikely to win approval in the House.\nIn addition to the tax relief for manufacturing, the tax measure has $42.6 billion in tax relief for multinational companies. All the tax breaks are paid for by $136 billion in measures intended to close corporate loopholes and tax shelters.