Senate Democrats Facing a ‘Pay as You Go’ Problem

By EDMUND L. ANDREWS
New York Times

WASHINGTON, Nov. 2 — Senate Democrats face an agonizing choice in the days ahead: find a way to raise at least $50 billion in new taxes, or undermine their most important rule for enforcing budget discipline.

With the end of the year fast approaching, Congress has to pass another one-year fix to prevent the alternative minimum tax — a tax originally created to make sure millionaires paid income taxes — from engulfing about 23 million households with incomes as low as $50,000.

Democrats and Republicans alike want to prevent that increase, just as they have in the past, but the one-year cost has ballooned and Democratic “pay as you go” rules now require Congress to make up for the lost revenue.

On Thursday, the House Ways and Means Committee approved a $76 billion bill that would freeze the alternative minimum tax, extend several other tax breaks and pay for that mainly by eliminating a major tax break for people who run private equity funds and scores of other investment partnerships.

But Senate Democrats are less than enthusiastic about that tax increase, and they worry that they cannot muster the 60-vote majority they will need to pass any measure that would comply with the pay-as-you-go rule.

Senator Max Baucus of Montana, chairman of the Senate Finance Committee, has been silent about the issue for weeks, promising only to be “as fiscally responsible as possible.”

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