Fiscal Cliff Averted: How The White House Got A Deal Before The Deadline

The "fiscal cliff" legislation passed this week included $76 billion in special-interest tax credits for the likes of GeneralElectric, Hollywood and even CaptainMorgan. But these subsidies weren't the fruit of eleventh-hour lobbying conducted on the cliff's edge -- they were crafted back in August in a Senate committee, and they sat dormant until the White House reportedly insisted on them this week.

The Family and Business Tax Cut Certainty Act of 2012, which passed through the Senate Finance Committee in August, was copied and pasted into the fiscal cliff legislation, yielding a victory for biotech companies, wind-turbine-makers, biodiesel producers, film studios -- and their lobbyists. So, if you're wondering how algae subsidies became part of a must-pass package to avert the dreaded fiscal cliff, credit the Biotechnology Industry Organization's lobbying last summer.

Some tax lobbyists mostly ignored the August bill "because they thought it would be just a political document," one K Streeter told me. "They were the ones that got bit in the butt."

Here's what happened: In late July, FinanceChairman MaxBaucus announced the committee would soon convene to craft a bill extending many expiring tax credits. This attracted lobbyists like a raw steak attracts wolves.

Former Sens. JohnBreaux, D-La., and TrentLott, R-Miss., a pair of rainmaker lobbyists, pleaded for extensions on behalf of a powerful lineup of clients.

GeneralElectric and Citigroup, for instance, hired Breaux and Lott to extend a tax provision that allows multinational corporations to defer U.S. taxes by moving profits into offshore financial subsidiaries. This provision -- known as the "active financing exception" -- is the main tool GE uses to avoid nearly all US corporate income tax.

Liquor giant Diageo also retained Breaux and Lott to win extensions on two provisions benefitting rum-making in PuertoRico.

The K Street firm CapitolTaxPartners, led by TreasuryDepartment alumni from the ClintonAdministration, represented an even more impressive list of tax clients, who paid CTP more than $1.68 million in the third quarter.

Besides financial clients like Citi, GoldmanSachs and MorganStanley, CTP represented green energy companies like GE and the AmericanWindEnergyAssociation. These companies won extension and expansion of the production tax credit for wind energy.

Hollywood hired CTP, too: TheMotionPictureAssociation of America won an extension on tax credits for film production.

After packing 50 tax credit extensions into the bill, the committee voted 19 to 5 to pass it. But then it stalled. The Senate left for the conventions and the fall campaign. Meanwhile, House Republicans signaled resistance to some of the extensions -- especially for green energy.

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Fiscal Cliff Averted: How The White House Got A Deal Before The Deadline

Fiscal Deal Wipes Out Obamacare Funding for Health Co-Ops

“The fiscal cliff deal, approved by Congress on New Year’s Day, eliminates most of the more than $1.4 billion in remaining funding from the federal health law for new nonprofit, customer-owned health plans designed to compete against the major for-profit insurers,” reports MedPage Today.

The withdrawal comes after a two-year period in which nearly $2 billion in loans were approved for 24 proposed state co-ops. Those loans will escape the cut, but no new loans can be approved for any additional co-ops.

“We were blindsided by the elimination of funds,” said John Morrison, president of the National Alliance of State Health Cooperatives. “The health insurance industry is getting its way here by torpedoing co-ops in the 26 remaining states. This is not about budgets; it is about those health insurance giants killing competition at the expense of millions of Americans who will pay higher premiums because of it.”

By signing the so-called fiscal cliff deal, it appears that President Obama knowingly “torpedoed” part of his own hard-fought health care law. Initially, the 2010 Affordable Care Act allocated $6 billion to help start co-ops and meet state insurance solvency requirements. “In 2011,” MedPage Today reports, “Congress reduced that funding to $3.4 billion as part of broader budget cuts.”

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