Fiscal Cliff Deal Sneaks In Wall Street Gifts, NASCAR Perk

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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