The Senate next week is expected to try to vote on a bill introduced last week by Finance Committee chairman Max Baucus, D-Mont., that would extend dozens of expired and expiring tax breaks, patch the alternative minimum tax, and implement tax incentives for alternative energy.

However, the bill could be delayed, as bickering among the Democrats and Republicans over whether the tax breaks should be offset with revenue raising measures could create an obstacle to its consideration.

While the Senate is expected to begin considering it sometime next week, it currently appears that Democrats have more work to do in terms of drumming up GOP support if they want to avoid a repeat of what happened a month ago.

In June, Senate Republicans twice defeated procedural votes on the House-passed extenders bill, arguing that the costs of extending current tax policy should not be offset by new revenue-raising measures included by Democrats, who are attempting to follow so-called pay-go rules for the legislation.

At that time, it appeared Democrats would have to win over a handful of Republicans to garner the 60 votes needed to jump the procedural hurdle, but attempts at a compromise over Baucus' new bill so far appear to be unsuccessful.

In addition to earlier provisions, Baucus's bill also now includes authorizing $5 billion in non-offset disaster relief for Midwestern flood victims and $8 billion for the Highway Trust Fund. It does not include proposals to raise the revenue to pay for them.

The new bill does remove some of the more controversial measures in the House bill, such as new tax deduction rules for trial attorneys.

The measure also contains a one-year patch to the AMT without offsets, juxtaposing Baucus' plan with that of House Ways and Means Committee chairman Charles Rangel, D-N.Y., who left AMT out of his extenders bill and instead passed a fully offset AMT patch in separate legislation last month.

The AMT, which applies to interest earned on private-activity bonds and some governmental and 501(c)(3) bonds, was created to prevent high-income households eligible for multiple tax breaks from paying little or no taxes. However, the AMT is not indexed to inflation, so more taxpayers become subject to it each year.

Attempts to earn support for a tax-extenders measure from Republicans by tweaking the bill have come up short. Despite adding a provision that would require health insurance companies to cover mental health on par with other ailments, Sen. Pete Domenici, R-N.M., a longtime supporter of such a measure, said last week he would not change his opposition to the bill.

If Baucus fails to garner enough support for his latest attempt, it is expected that the Senate will not take up the matter again until this fall, after the August recess. At that time, the chamber could develop an entirely new bill negotiated between the two parties.

In addition to the AMT and other items, the pending bill would also authorize $2 billion of clean renewable energy bonds to finance facilities that would generate electricity from renewable resources. In addition, the bill would authorize state and local governments to issue another $400 million of qualified zone academy bonds annually, which can be used for public schools located in certain designated areas.

Meanwhile, the Senate Saturday passed the massive omnibus housing bill, finally sending the $300 billion measure to President Bush, who is expected to sign it this week.

That bill contains a number of significant bond provisions, such as providing an additional $11 billion in mortgage revenue bonds to housing finance agencies to refinance subprime mortgages or provide new loans to first-time homebuyers, as well as a permanently exempting all housing bonds from the AMT.

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