Earlier this week, Senate Majority Leader Harry Reid (D-Nev.) filed a motion to proceed on the Jobs, Energy, Families and Disaster Relief Act of 2008 (S. 3335), thereby setting a vote for July 30. However, some Democrats are uncertain if leadership can secure the requisite 60 votes needed to invoke cloture and move to a full debate on the legislation. If Republicans are successful in keeping the floor debate focused on gas prices, the Senate may have to wait until September to deal with the extenders issue.

Introduced by Senate Finance Committee Chairman Max Baucus (D-Mont.), the Senate bill, which is modified version of two previous extender bills (S. 2886) and (H.R. 6049) would extend temporary tax provisions including:
The research and development credit,
Multinationals’ active financing exemption for taxes deferred on income earned abroad,
Renewable energy incentives for two years, and
Patch without any offset the Alternative Minimum Tax (AMT) for one-year.

The Senate has twice failed to proceed to consideration of the revenue-neutral $54 billion House-passed bill, which also includes the following tax incentives:
A long-term extension and modification of the renewable energy production tax credit,
Extension and modification of the tax credit for solar energy and fuel cell investment, and
Tax credits for energy-efficiency improvements to existing homes.

This time around, Baucus has added a mental health parity provision that would put mental health benefits on par with medical and surgical benefits as well as a $4.2 billion package of flood disaster relief for victims in the Midwest. The mental health parity provision-—a compromise between House-passed legislation (H.R. 1424)and the Senate's version (S. 558)-—would require insurers to offer the same level of coverage for mental health conditions as physical conditions. Under the agreement, employers with fewer than 50 workers would be exempt. While House and Senate negotiators reached compromise weeks ago they have been wrestling with how to pay for the estimated $3.6 billion cost of a stand alone bill.

As before, the fight is over revenue increases included to help offset the cost of extending the tax relief provisions. The bill contains $54 billion in offsets including a $23.8 billion provision that would change the tax treatment of deferred compensation paid by managers of offshore hedge funds; a $22.3 billion provision that would delay for 10 years, until 2019, the implementation of the worldwide interest allocation rule; and an $8 billion proposal that would mandate basis reporting by brokers for transactions involving publicly traded securities.

Republicans oppose raising taxes in order to offset the cost of extending current law. Democrats, on the other hand, tend to support fully offsetting all extensions, although they have moved significantly in the other direction over the past couple of months; less than half of the revenue loss in the current package is replaced by offsetting tax increases.

The goal of adding the mental health parity and flood relief provisions is to attract new votes, likely by Senators Charles Grassley (R-Iowa) and Pete Domenici (R-N.M.), but recent comments by Grassley suggest the effort may fail. Over the weekend, Grassley indicated that he would continue to oppose the package due to his insistence that the Senate should "not use tax increases to extend existing tax policy."

Regardless of the outcome of this vote, a final tax relief compromise-—including a patch for the AMT—-will not be reached until September.