Earlier I noted that there is considerable opposition in the Senate to the "offsets" included in the House version of the AMT patch. The most cogent objection, from a theoretician's viewpoint, is that they are using permanent tax increases to fund temporary tax cuts, which is never good practice. Beyond that, there are objections to the specific tax increases that have been selected.
Now, according to Tax Analysts ($), the White House has threatened to veto the House bill if it includes those provisions.
That's a pretty high stakes game of chicken. I begin to believe that the reason the AMT patch has been delayed for so long was precisely to be able to call the President's bluff on this. If the bill is passed and vetoed before Thanksgiving, which would seem to be very unlikely to me, they would have time to come back in December with a compromise version. IRS is already making plenty of noise about the problems of a December tax code change, so it's clear they are preparing for it.
But what if the House bill is presented to the President in December? A veto then would most likely kill the chance to fix the AMT for 2007, so 20 million more taxpayers would really get to pay this tax. Who would win and lose in the political fallout? It's not obvious to me, especially when you consider that the majority, perhaps the vast majority, of those who will be paying the AMT for the first time will be Democrats. (The impact of the AMT is highest on the coastal states with the highest state tax regimes, recently the blue states.)
Do the Democrats shore up their base by taxing it, because they can blame Bush for a veto they will paint as protecting extravagently compensated hedge fund managers? Or will the esteem for Congressional incumbents fall even lower than it is already?