Bush and Congress May Address AMT

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Don't expect any blockbuster legislation, such as major tax or entitlement reform, over the next two years–not with a presidential election looming in 2008. (Look for Social Security and extending the Bush tax cuts to be major issues in the race for the White House.) But what might get passed? One hard-to-escape issue is the alternative minimum tax. It will cost about $45 billion to keep millions of Americans from getting pinched next year. How will Congress pay for the temporary patch?

In a research note today, Greg Valliere of Stanford Policy Research says that "the most likely target will be corporate tax preferences; oil industry tax breaks definitely will be under the gun. If Paulson signs off on some miscellaneous tax hikes as part of a 'pay as you go' process, Bush would have to sign the bill." Valliere also predicts that Bush will be "likely to deal with Democrats on immigration reform, a minimum wage hike, and he may even go along with legislation that would mandate pay for workers who call in sick."

Any questions or comments can be E-mailed to me at jpethokoukis@usnews.com.