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Senate Cuts Deal On Massive Tax Package

Stop the presses. There's actual movement on actual legislation in the Senate.

The two lead tax negotiators in the Senate, Charles Grassley (R-Iowa) and Max Baucus (D-Mont.), have reached a deal on a massive tax package that would extend renewable energy tax breaks, protect millions of tax payers from getting hit by the dreaded alternative minimum tax, continue the popular child tax credit and extend a variety of other business tax cuts.

None of the tax breaks are new _ they are merely extensions of existing tax rules _ but the Senate deal represents one of the few bipartisan breakthroughs of this gridlocked session.

The total cost has not been calculated, but it could top $100 billion in tax cuts. The AMT fix would cost $64 billion, and a handful of clean energy tax incentives would cost $17 billion. The rest of the package _ including the business tax cuts _ has not been tallied but one of the original proposals was estimated to cost $40 billion.

While both parties will be able to crow about engineering a tax cut just six weeks before the election, Democrats were also able to extract their pound of flesh from Big Oil. In a compromise, Republicans agreed to freeze a special tax break for oil companies that conduct deep water drilling, putting off a deeper tax cut that was schedule to go into effect. This compromise protects conservative Republicans from having to embrace an actual tax increase, yet it allows Democrats to begin a long-desired pushback on special tax breaks for Big Oil.

The tax package, which has the seal of approval from Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell, would also include $7 billion in tax relief for people hit by floods in the Midwest and hurricanes along the Gulf Coast.

"This agreement will lead America toward clean, homegrown energy and the good-paying jobs that come with it," said Baucus, the chairman of the Senate Finance Committee. "Protecting families from the alternative minimum tax and extending expiring tax cuts will put real money in the pockets of struggling families, and enable entrepreneurs to invest and innovate."

Grassley, the top Republican on the committee, added: "This legislation will be a huge shot in the arm to the economy, and the timing couldn’t be better. "

The House passed its version of the tax extenders bill in May, so the two chambers would have to quickly reconcile their differences to get the legislation signed before the election.