Senate clears $81B tax-break package

Congress cleared dozens of special-interest tax breaks late Tuesday as senators rushed to finish business and close up for the year.

The $81 billion package includes breaks for everything from teachers’ classroom supplies to racehorses to wind turbine companies, and also includes broader tax breaks such as the deduction for state and local sales tax. The tax breaks apply to 2014, which means they are retroactive for this current year, but will have to be revisited again next year.

“This tax bill doesn’t have the shelf life of a carton of eggs,” said Sen. Ron Wyden, Finance Committee chairman, tempering other senators’ self-congratulations. The Oregon Democrat said Congress should have done a lot more to rewrite the tax code, stripping out some of the special breaks while rewriting others to make them permanent, giving taxpayers more certainty.

But with divided government, lawmakers said the short-term extension was the best they could do.

Senators also cleared a host of presidential nominations, approving a new chief for U.S. Immigration and Customs Enforcement, a deputy secretary for the State Department and a number of federal judgeships. Democrats had insisted they be approved before turning control over to Republicans next year.

Congress deadlocked, however, on extending the federal Terrorism Risk Insurance program, after Sen. Tom Coburn objected. That means the program expires at the end of this year, though lawmakers are certain to try to renew it in the new Congress.

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And in another sign of Washington wrapping up business for the year, President Obama signed Tuesday evening the $1.1 trillion spending bill that passed Congress at the weekend and keeps the government operating for the next nine months.

The tax package, meanwhile, cleared the Senate on a 76-16 vote, after having passed the House earlier this month, and it now goes to Mr. Obama for his signature.

Even as they cleared up this year’s business, GOP senators were already looking ahead to next year, when they’ll have control of both the House and Senate and can drive their agenda.

Incoming Senate Majority Leader Mitch McConnell announced Tuesday that the first bill his chamber will consider will be to approve the Keystone XL pipeline.

“We’ll be starting next year with a jobs-creation bill that enjoys significant bipartisan support,” said Mr. McConnell, Kentucky Republican. “The first item we’re going to do will be the Keystone XL pipeline.”

The international pipeline, which would carry oil from tar sands in western Canada to refineries on the U.S. Gulf Coast, has been a persistent flash point between environmentalists and pro-energy lawmakers.

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It also could become Mr. Obama’s first veto in the new Congress.

The Obama administration has delayed approval of the project to appease environmentalists, who object to potential oil spills and greenhouse gas emissions. The pipeline needs federal approval because it crosses an international border.

Senate Democrats last month defeated the same bill with a filibuster, despite it being pushed by Sen. Mary Landrieu, a Democrat from Louisiana who had hoped the legislation would help her in a tough re-election contest against Republican Rep. Bill Cassidy. Mrs. Landrieu ultimately lost the race as well.

In making the announcement, Mr. McConnell took a parting shot at outgoing Senate Majority Leader Harry Reid, Nevada Democrat, whom Mr. McConnell has criticized for exerting tight control over the legislative process and blocking senators from offering amendments on bills.

“Senators on both sides will offer energy-related amendments. There will be no effort to try to micromanage the amendment process,” he said. “We’ll move forward and hopefully be able to pass a very important job-creation bill early next year.”