Voting mostly along party lines, the U.S. Senate cleared the way Thursday for a massive tax cut package that would primarily benefit the wealthy and profitable corporations. The 51-49 vote on a budget resolution would dramatically increase deficits and threaten investments that grow the economy and help everyday Americans. The Atlantic’s Russell Berman reports:
The Senate budget would allow Congress to reduce taxes by up to $1.5 trillion over the next decade without offsetting the cost. That had been in the Senate plan all along, but over the course of several hours on Thursday, Republicans had opportunities to shift course. Democrats offered amendments that would have forced Congress to work on a deficit-neutral tax plan, while Paul, the Kentucky spending hawk, tried to get his colleagues to reduce spending as well as taxes.
Senators voted down amendments that would have required deficit neutrality and prohibited tax cuts for the top 1 percent of earners. Sen. Heidi Heitkamp offered a failed amendment that would guarantee no one making under $250,000 a year would face a tax increase. Bloomberg’s Sahil Kapur has more:
She said it’s “essential” to draw “an absolute bright line” against that prospect. Nonetheless, 51 Republicans shot her measure down after Senate Budget Chairman Mike Enzi called it a “poison pill” that would “inappropriately bind the Finance Committee’s work on any tax legislation.” The White House and GOP leaders have refrained from categorically promising that no middle class Americans will see a tax hike, arguing that there may be exceptions to the broad tax cuts they aim to provide.
Budget woes squeeze construction projects
Louisiana’s reliance on more than $1 billion in temporary taxes has had a spillover effect on the state’s ability to borrow money for construction projects. The state operates under a self-imposed debt ceiling, which is based on the amount of recurring tax revenue the state expects to collect. Last month the director of the State Bond Commission warned that the state was close enough to the cap that it might not be able to borrow any money in the 2018-19 budget year. But the AP’s Melinda Deslatte reports that the pressure has eased somewhat due to a debt refinancing and better-than-expected terms for a recent bond sale.
Instead, [Bond Commission director Lela] Folse said the state could borrow an estimated $225 million next year under the regular debt structure. That’s not enough, however, to keep up with the planned list of construction work.“We need to recognize that this is good news, but it’s not time to celebrate just yet,” said Commissioner of Administration Jay Dardenne, chief financial adviser to Gov. John Bel Edwards. The borrowing constraint is a byproduct of Louisiana’s ongoing budget and tax debate. More than $1 billion in temporary state taxes, mainly sales taxes, expire when the next budget year begins. With less revenue on the books, the calculation of the borrowing capacity also is driven down.
Tax plan favors wealthiest
The tax plan put forth by President Donald Trump relies heavily on ending the federal deduction for state and local taxes (SALT). Most of the benefits of SALT deductions go to higher-income earners, which may make its elimination seem like a progressive change. But as Michael Leachman and Iris J. Lav from the Center on Budget and Policy Priorities explain, the trade-offs for ending these deductions would not benefit most Americans.
The Republican tax plan, however, would replace the deduction with tax cuts that are, on net, even more tilted to the top. As a whole, by 2027 (when key elements of the plan would be fully in effect), 80 percent of the net tax cuts would go to the top 1 percent of Americans, the Tax Policy Center estimates. These estimates count all of the plan’s provisions.
SALT deductions also cause higher-income filers to be more supportive of state and local taxes. Ending these deductions could adversely affect state and local budgets.
Repealing the deduction would almost certainly make it harder for states and localities — many of which already face serious budget strains — to raise sufficient revenues in the coming years to fund K-12 and higher education, health care, and other services. To balance their budgets with insufficient revenue, state policymakers would likely make cuts in such services that would be widely felt.
Vox’s Matthew Yglesias explains that it’s not that hard to craft a plan that focuses on families struggling to make ends meet.
You’d start with some tax policy measures that benefit people at the bottom and the middle of the economic hierarchy. An expanded Child Tax Credit, something that some Republicans support, would help an enormous number of poor and middle-class families — especially if it were made fully refundable. An expanded Earned Income Tax Credit, including provisions to allow childless men to benefit, would do the same.
What’s next on health care?
Gallup reports that the U.S. uninsured rate went up in the third quarter of 2017 for the first time since the implementation of the Affordable Care Act, likely caused by the significant uncertainty surrounding the future of health care and because of the sabotage efforts by President Donald Trump’s administration. Sen. Lamar Alexander cautioned his Republican colleagues against continued efforts to repeal the Affordable Care Act and urged them to join him and 23 cosponsors in bipartisan efforts to strengthen the health care system. The Hill’s Alexander Bolton has the story.
We’ve had about 50 votes, maybe more, and we lost them all. And we made thousands of speeches and we lost them all,” Alexander said on the Senate floor. He said that insisting on full repeal of the controversial law when the votes aren’t there would only hurt millions of Americans and could eventually lead to a single-payer health-care system if the current one collapses.“I would ask what’s conservative about unaffordable premiums?” Alexander asked. “What’s conservative about creating chaos so millions can’t buy health insurance?” He argued that Republicans haven’t made any progress over the past seven years to give the states more flexibility in creating insurance policies for the individual markets.
Gov. John Bel Edwards joined a group of bipartisan governors urging Congress to pass the bipartisan health care bill put forth by Alexander and Murray.
Lawmakers consider Medicaid contract extensions
Lawmakers in the House and Senate Budget Committee will decide on Friday whether to extend the contracts for private companies that coordinate health services for 90 percent of Medicaid recipients in Louisiana. This equates to approximately 1.5 million people who benefited from the recent Medicaid expansion. The AP’s Melinda Deslatte has the story:
Andrew Tuozzolo, health department chief of staff, said the 23-month extensions will come with more accountability and new incentives aimed at improving health quality. He said the Jindal administration-era contracts didn’t have enough controls. “We just believe there were ways in which the previous contracts were written that didn’t drive health care outcomes and quality and really bear down on how we do it more efficiently,” Tuozzolo said Thursday. “With the extensions, we’ve kind of made a large step toward getting where we want to be.” Republican House Speaker Taylor Barras said he hasn’t heard any lawmakers object to the contract extension. But he expects many questions at Friday’s hearing, focused on ways to limit costs.
Number of the Day
$5.49 million – Amount an estate must be worth before incurring tax under the federal estate tax; one of a litany of cuts specifically for the super-wealthy in President Trump’s plan. (Source: Vox)