Tag: reconciliation

New Promised Trump Tax Cut Is A Big Nothingburger

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President Trump made headlines late last week with another of his shoot-from-the-hip policy pronouncements, this time that there would be a tax cut before the midterm elections. According to The Washington Post, Trump said the cuts would get done “sometime just prior, I would say, to November.”

I’m going to give Trump the benefit of the doubt and assume that he meant that only the specifics of his new tax proposal would be announced rather than that the plan would be enacted prior to November. With Congress out of session and the GOP leadership almost certainly against calling its members back to Washington during the final days of the election, it’s hard to imagine that he meant anything but that there would be an announcement.

(I shudder to think about the possibility that Trump either thought this actually could get done legislatively over the next two weeks or that he could ignore the U.S. Constitution and simply impose the changes he wants without congressional action.)

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But even assuming that what Trump meant was just an announcement, it’s hard to see how what he might propose (For the record, I’m not at all convinced he will actually propose anything) can get done in the lame duck. Here’s why.

1. The Trump tax plan can be filibustered in the Senate.

2. Unless Majority Leader Mitch McConnell (R-KY) is willing to do away with the legislative filibuster, which he so far has been completely unwilling to do, the only way to avoid a filibuster of the Trump tax bill will be to do it as a reconciliation bill.

3. But reconciliation may only be done if both houses of Congress adopt a budget resolution conference report with reconciliation instructions ordering it…and neither the House nor Senate have passed a budget resolution yet this year. The House Budget Committee has approved one but there has been no activity in the Senate.

4. Therefore, before a new Trump tax plan could be considered, a budget resolution with its projected trillion-dollar deficits would have to be adopted. That will be much easier to do after than before the election, but still won’t be a simple vote for some GOP members even if it would make a tax cut easier..

5. And it will take time. Even with a truncated process, adopting a budget resolution is likely to take at least two weeks…and probably closer to three or four.

6. Meanwhile, votes become less reliable the longer a lame duck continues as retiring and defeated representatives and senators become less interested in their current job and more concerned about what’s next. If the past is any guide, some will even stop coming to Washington entirely.

7. This is not to say that enacting another tax bill will be impossible, just that it will be very difficult. The process could be expedited if the House passed the budget resolution already adopted by its budget committee, if the Senate then agreed to what the House passed with an amendment requiring reconciliation, if the House then passed the budget resolution with the Senate amendment, if the House Ways and Means Committee quickly adopted the Trump plan, if the full House quickly passed what the committee approved and if the full Senate bypassed its Finance Committee and adopted the House-passed bill without making any changes.

8. That’s six ifs. Add in the typical no shows during a lame duck and you get a recipe for no action.

That will put the new Trump tax plan on the same legislative trash heap as his wall, his space force, his infrastructure proposal and his military parade.

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Trump Will Say Democrats Stole The 2018 Election…And 7 Other Predictions

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Less than a month before the election, about a month before the start of the lame duck session of Congress, a little over about 50 days before the next government shutdown deadline on December 7 and less than three months before the next Congress begins, these 8 things are both keeping me up at night and giving me nightmares while I’m awake.

It’s therapeutic (at least for me) to share them.

1. Trump Will Insist The Democrats Stole The 2018 Election

If Democrats win one or both houses of Congress this November, Trump will insist that it happened because (1) they colluded with the Russians or Chinese, (2) they hacked the election results in all 50 states, (3) illegal immigrants voted in record numbers or (4) all of the above. Trump will say he has information proving that the results weren’t a referendum on him, that he doesn’t plan to change a thing and that he will make the Democrats pay for stealing the election.

Then see #s 5,6, 7 and 8 below.

2. Big Federal Budget Deficits Are Now Permanent

The Trump administration will soon verify what the Congressional Budget Office reported last week.  When the U.S. Treasury releases its monthly statement for   September, it will confirm that the fiscal 2018 federal budget deficit increased to close to $800 billion dollars this past year and will be at or above $1 trillion for 2019.

But that will be just the beginning.  With more tax cuts about to be considered (see #3), a trillion-dollar infrastructure plan likely to be enacted at some point in the next few years, hurricanes and other disasters almost certainly on the horizon and no serious revenue increases or spending reductions likely to be considered, $1 trillion or higher federal budget deficits are now a permanent part of the U.S. economy and American politics. The previous political goal of projecting on paper (let alone actually achieving) a balanced budget in 10 years is now gone…forever.

3. Another Huge Tax Cut Will Happen This Year

I’m increasingly convinced that, during the lame duck, the Senate will take up the tax cut the House passed just before it recessed for the election. My sources on Capitol Hill tell me that preparations are already underway for Congress to quickly adopt a budget resolution at the start of the lame duck just so the Senate will be able to avoid a filibuster on the tax bill.

This will increase the deficit by another $600 billion to $700 billion over the next decade, and much more after that.

4. The Budget Deficit Will Reach $2 Trillion By 2024

There will be an economic downturn at some point over the next few years. Combined with #2 and #3 above, this will increase the deficit to close to $2 trillion.

5. Trump Will Ignore Democratic Subpoenas And Set Off A Huge Appropriations Fight

The common assumption seems to be that, if the Democrats are in the majority in one or both houses of Congress next year, as part of official committee investigations they will inundate the Trump administration with subpoenas for documents and witnesses. Not only do I seriously doubt that the White House will meekly comply with these subpoenas, I expect the president to routinely assert every possible reason that he doesn’t have to do so.

Yes, the courts will then get involved. But I also expect congressional Democrats to use next year’s appropriations process to push the administration to comply. It wouldn’t be shocking, for example, if Democrats threaten the funding for several assistant secretaries and the White House counsel in response to the White House’s stonewalling.

6. Shutdown Showdowns Are About To Become Even More Of A Thing

There will be multiple shutdown fights for two reasons.  First, Trump may not agree to full-year funding in any form (a continuing resolution, omnibus appropriation or Department of Homeland Security appropriation) without money for his wall. He’s far more likely to agree to a series of short-term funding bills that allow him to keep raising the issue, especially if he’s able to blame a Democratic majority for the wall not happening. That will set up frequent shutdown threats every year.

Second, see #5.

7. Trump Will Precipitate A Debt Ceiling Fight Sooner Than Expected

The federal debt ceiling was suspended by the Bipartisan Budget Act of 2018 until March 1, 2019, and the overwhelming assumption is that the Treasury will use “extraordinary measures” (the Washington equivalent of getting a cash advance on one credit card to make a payment on another) to delay raise the debt ceiling until September.

But just because Treasury has always used extraordinary measures in the past doesn’t mean it’s guaranteed to use them this time. Trump could easily at least threaten not to use these bookkeeping gimmicks at all or to stop using them at some point before September if the president doesn’t get something (such as funding for his wall, a space force and a military parade) he wants in return.

8. Trump 2020 Budget Will Be An Even Bigger Political Statement

The first two Trump budgets basically were campaign brochures masquerading as official federal documents. The next Trump budget — fir fiscal 2020 budget — will be released as his reelection efforts formally get underway and so will have very little to do with governing. It will be largely forgotten on Capitol Hill within two weeks of it being released.

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The GOP Could Enact Another Tax Cut This Year

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When House Republicans passed their tax 2.0 last week and then recessed until the lame duck session that begins this November, the presumption was that this latest GOP descent into bigger budget deficits was nothing more than a pre-election ploy that would never go any further.

And with Majority Leader Mitch McConnell (R-KY) saying that the Senate had no plans to take up whatever the House passed before the election, that seemed like a safe bet.

But contrary to what’s currently being assumed, 2.0 could definitely become law this year.

It all has to do with the filibuster.

The House-passed tax bill may be filibustered in the Senate and there’s no way that enough Democrats will join Republicans to provide the needed 60-vote margin to stop the debate and get to a vote. This will be especially true in a lame duck when it’s two years before the next election and fear of voter retribution is at its absolute lowest point.

This can’t-stop-a-filibuster problem is the GOP’s own doing. While the reconciliation procedures of the congressional budget process would have prevented a filibuster, reconciliation only happens pursuant to instructions included in a budget resolution and McConnell and Speaker Paul Ryan (R-WI) decided early this year that there wouldn’t be one. That decision prevented reconciliation from being used and has stopped 2.0 from being enacted.

McConnell and Ryan were making a purely political calculation. They wanted to protect the GOP representatives and senators running for reelection from having to vote in favor of a budget resolution that projected trillion-dollar deficits.

But the need to protect these House and Senate members won’t exist after Election Day. That will make a budget resolution and reconciliation acceptable and, therefore, tax 2.0 doable.

It won’t be easy, but it’s certainly not impossible.

First, the House and Senate would quickly have to adopt a fiscal 2019 budget resolution with reconciliation instructions that require the 2.0 tax changes.

Second, the House-passed 2.0 would have to be designated as the legislation required by the just-adopted budget resolution’s reconciliation instructions or the House would need to re-pass 2.0.

Third, with a simple majority, the Senate could either pass its own 2.0 or…and much more likely…pass the House-adopted bill.

Fourth, the 2.0 bill now adopted by the House and Senate would then go to the president for his signature and enactment.

Don’t dismiss this out-of-hand.

The GOP has already shown its willingness to use the budget process very creatively when it passed two budget resolutions in 2017 so reconciliation could be used twice — once to try to repeal the Affordable Care Act and once for tax 1.0. This would just be a variation on that theme.

In addition, the Republican political considerations will all change significantly after the election, especially if they lose control of one or both houses. In particular, the GOP may want to increase the budget deficit as much as possible to limit what the Democrats are able to do legislatively when they’re in charge in the next Congress.

Finally, if it’s not enacted during this lame duck, the GOP’s ability to reward its supporters and donors with the tax changes provided in 2.0 may be gone for two years or longer. Republicans may want to go for it while they are still able to do so.

Follow Stan Collender on Twitter @thebudgetguy

 

 

New GOP Tax Cut Plan Is Really All About Campaign Contributions

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It was big news last week when Ways and Means Committee Chairman Kevin Brady (R-TX) let it be known that the House would debate and presumably pass another tax cut this September.

The Brady plan includes three separate bills that will (1) extend the individual tax cuts currently set to expire in 2025, (2) provide tax incentives for research and development and (3) enhance the tax code’s incentives to save for retirement.

Passing a tax cut just before the election sounds like every incumbent’s legislative dream come true.

But in spite of their obvious surface-level political attractiveness, it’s very likely that none of the three bills will be enacted this year.

The reason is something that congressional Republicans decided to do…or in this case not do…months ago: adopt a budget resolution.

As I explained in this post back in February, House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell decided at the start of this year that there would be no fiscal 2019 budget resolution so that there would be no politically embarrassing votes for Republicans on the trillion-dollar budget deficits resulting from last year’s tax bill. No budget resolution meant no reconciliation and no reconciliation meant that 60 votes would be required on tax legislation. Even on a pre-election tax cut, that meant a filibuster would be probable.

This almost certainly explains the reluctance expressed last week by many Senate Republicans about taking up any tax cut that might pass the House this fall.

(In case you’re wondering how Senate Democrats can vote against a tax cut just before the election, I was told by multiple sources this week that Democrats will offer their own tax cut proposal that Republicans will vote against. That will given Democrats political license to vote against the GOP’s plan.)

So why is Brady, who must know that his bills are doomed from the start in the Senate, still planning to move ahead?

Brady is using his new tax cut scheme to solicit campaign contributions from corporations.

It has nothing to do with taxes, fiscal policy or economics: Brady is using his new tax cut scheme to solicit campaign contributions from corporations and industries who want something in these bills.

The best way for corporations to get Brady to pay attention will be to contribute to him, the GOP’s campaign arms, other Ways and Means Republicans, the leadership political action committees and the Trump reelection effort, and to do it before the election.

Hence Brady’s rush to do something now even if it is already set up to fail.

Brady and the rest of the House GOP will be looking for first-time or increased campaign contributions/political tribute from three categories of tax cut supplicants:

  1. The companies, industries and groups that didn’t get anything in the tax cut enacted last December.
  2. The companies, industries and groups that didn’t get all they wanted in the tax cut enacted last December.
  3. The companies, industries and groups that need a change from what they got last December (a so-called “technical correction’) because that bill was drafted improperly.

There are three reasons why, no matter how unlikely these bills are to be enacted, few in these three categories will be able to ignore the Brady plan.

First, kowtowing to the chairman of the House Ways and Means Committee is always a good thing to do.

Second, even if the bills aren’t enacted, having the provision you want included this time will make it much easier to get it included the next time a tax cut is considered, even if Democrats gain the majority in the election.

Third, there’s always the chance that legislative lightning will strike and one or more of the three Brady bills will be enacted after all.

The spin surrounding the Brady bills will have less to do with the proposed corporate tax changes and will instead focus on extending the individual tax cuts.

In reality, however, given that the actual purpose of the Brady plan is to obtain corporate campaign contributions, extending the individual tax cuts will be the least important of the three tax cut proposals.

It will also provide the GOP with the political cover to get what it really wants.

There’s so much more here:

OMB Director Mick Mulvaney Says CBO Was Right After All

House, Senate GOP Should Use This Year’s Appropriations To Stop Trump On Russia

Yes…Trump Will Shut Down The Government This Fall

The House and Senate Appropriations Committee Are A Total Disgrace

The Definitive Larry Kudlow Take Down

You’ve Been Warned: Trump’s Trillion Dollar Budget Deficits Are Here To Stay