Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Charles Grassley (R-IA) last week introduced a $100 billion bill that would extend tax breaks that have expired or are set to expire at the end of 2008. The bill includes an increase in the alternative minimum tax (AMT) exemption for 2008 and a two-year extension of the research and development tax credit. In addition, the bill would extend a series of renewable energy incentives that are scheduled to expire this year, the state sales tax deduction, and a qualified tuition deduction. In introducing the legislation, Sen. Baucus said," America needs Congress to act on a host of tax provisions that mean real dollars and cents in their pockets."

Sens. Baucus and Grassley bundled the AMT patch intentionally with the other expiring provisions, including a package of military tax breaks, to make it more difficult to reject the provision. The overall cost of the bill was still being determined, but the AMT fix alone would cost an estimated $60 billion. None of the provisions in the bill are offset with spending cuts, and Senate Finance Committee members are still discussing how to comply with the House pay-as-you-go-rules. House Democrats are insistent that offsets be found for the bill, but Sen. Baucus has repeatedly said that there are not enough votes in the Senate to pass a bill with offsets. Last year, Congress passed a one-year AMT fix without offsets over the objections of House Democrats, but the extenders package died because the Senate could not agree on offset provisions.