Tax extenders questionable

Last fall I posted about a 2008 tax law change promoting cellulosic ethanol as fuel. CBO scored the new $1.01 per gallon tax credit as costing just $100 million in revenue.  Turns out the paper mills have been doing this for years, recovering something they call "black liquor" from pulp waste and using it to run the mills.  They are clearly eligible for the credit, so the future "revenue cost" has gone up a bit.

To $23 billion.

Note that we haven't spent the $23 billion, it's all future tax benefits.  But even though we never planned to spend that money, Congress never voted on a $23 billion subsidy for paper manufacturers, "closing the loophole" will now count as savings.  The $23 billion goes a long way toward covering the cost of the tax extenders that have been awaiting action this year—closing the "loophole" that the paper mills never asked for is included in the bill.

Trouble is, CCH reports, the same $23 billion "savings" was lumped into the Reconciliation Bill for health care reform.  So it's no longer available for other tax measures—such obvious double counting doesn't quite fly in Washington D.C.

How exactly we "pay" for more health care by canceling a tax credit we never meant to extend is a bit of a mystery to me.