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The House, Including 62 Democrats, Just Defied Obama


"We have an opportunity to change that today by passing this legislation and improving the R&D tax credit and making it permanent."

WASHINGTON, DC - MAY 7: Committee chairman U.S. Rep. Kevin Brady (R-TX) questions Federal Reserve Bank Chairwoman Janet Yellen during a Joint Economic Committee hearing entitled 'The Economic Outlook,' on Capitol Hill, May 7, 2014 in Washington, DC. Yellen said that the economy is on track for solid growth this quarter but remains concerned about the housing sector. Drew Angerer/Getty Images

The House of Representatives on Friday overwhelmingly approved permanent tax relief for companies engaged in research and development, despite a warning from the White House that President Barack Obama would veto the legislation.

Members approved the American Research and Competitiveness Act in an easy 274-131 vote. Despite Obama's veto threat, 62 Democrats voted for the bill along with nearly every Republican.

The House passed a bill from Rep. Kevin Brady (R-Texas) to permanently extend and simplify the research and development tax credit. (Getty Images/Drew Angerer)

The legislation from Rep. Kevin Brady (R-Texas) simplifies the way companies can calculate a tax break on research and development, and makes that relief permanent. But that change would eliminate more than $150 billion in tax revenues for the federal government over 10 years, which had prompted the White House to issue a veto threat.

"By making the R&D credit permanent without offsets, H.R. 4438 would add $156 billion to the deficit over the next 10 years," the White House said in a statement on the bill. While the White House said it supports making the tax credit permanent, doing so without offsetting the revenue loss in some way "represents the wrong approach."

The Obama administration criticized House Republicans in particular for moving ahead with a bill that is not "offset," since Republicans have made a point of ensuring that new spending is offset, usually with spending cuts. The White House noted that the revenue shortfall created by the research and development tax bill is much bigger than the shortfall caused by extending unemployment benefits, which Republicans have insisted must be offset with cuts.

Some House Democrats said they want permanent tax relief for research and development, but said they opposed the bill because its hit to the government's revenues would not be offset.

"We now have our colleagues coming forth and doing it in a way that puts it on a credit card, puts it on a credit card," House Budget Committee ranking member Chris Van Hollen (D-Md.) said. "Not one penny is paid for."

But Republicans argued this week that tax cuts have traditionally not been offset, or "paid for," with spending cuts, and that Democrats have been fine with this exception in the past.

"Many on the other side of the aisle have commented about the fact that this job-creating provision is unpaid for," House Ways and Means Committee Chairman Dave Camp (R-Mich.) said. "I would note that this provision, among other extenders, has historically not been paid for."

They also said that given the weak economy, permanent tax relief that helps companies create jobs should be a priority.

"Last month alone, 800,000 people left the workforce, and many more continue to search for a job," said House Majority Leader Eric Cantor (R-Va.). "Working people are having a tough time too. They are having a tough time climbing the economic ladder of success, partly because America is struggling to remain competitive in the global marketplace. However, we have an opportunity to change that today by passing this legislation and improving the R&D tax credit and making it permanent."

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