Bipartisan backing of device tax repeal threatened by gov't funding battle

Even before the government shutdown, opponents of the 2.3% device tax were rapidly developing bipartisan support for its repeal. In a twist, intertwining the issue with the federal funding fight seems to have split that unified support.

The new wrinkle is becoming clear in Massachusetts, where the state's Democratic congressional delegation has generally backed repeal of the tax as long as some way can be found to make up for the lost revenue. As The Boston Globe reports, Republican Sen. Susan Collins of Maine has proposed legislation that would restart government funding for 6 months and repeal the tax at the same time, similar to a House proposal that generated some House Democratic support. Both plans would also replace the lost revenue through the temporary reduction of mandated company contributions to employee pension funds.

The device tax is meant to generate $30 billion in revenue to help support the Affordable Care Act, and the government shut down on Oct. 1, in part, because Democrats weren't willing to repeal the tax as a condition for government funding.

Collins told The Boston Globe that a number of her Democratic colleagues are holding back support until they "see what the leadership will do." Democrats have generally said they don't want to link the device tax repeal to reopening the government, but would consider the issue after Congress passes a clean government-funding bill and also lifts the debt ceiling. The Bay State's two Democratic Senators, Edward Markey and Elizabeth Warren, echoed that policy in separate statements to The Boston Globe, as did other members of the Massachusetts legislative delegation. Some kicked the issue even further down the line, pitching device tax repeal as part of a larger revamp of the tax code.

Senate Democrats are facing pressure to reconsider. The Senate passed a non-binding resolution last year that supports a repeal, and Senate Republican Sen. John McCain of Arizona cited that as a possible basis from which to negotiate, the story explains. And a spokesman for Democrat Sen. Jeanne Shaheen of New Hampshire is quoted in the newspaper as saying she would be willing to consider Collins' proposed legislation.

As of Oct. 10, a new House plan to raise the federal debt limit through late November was generating some serious consideration. Government funding remained a point of contention, however. At the same time, a repeal of the device tax got a new lease on life from the White House. The Wall Street Journal reported this week that officials there have fielded the idea that they'd be willing to contemplate a repeal of the device tax outside of the debt ceiling and government funding debates, so long as Congress can find an alternative funding source.

- read the Boston Globe story
- here's the WSJ story (sub. req.)