Louisiana would lose under Senate tax bill

Louisiana would lose under Senate tax bill

The U.S. Senate could vote as early as Thursday on legislation that would add $1.4 trillion to deficits over a decade and raise taxes on many middle-class families while sharply cutting taxes for the wealthiest families and corporations

Number of the Day

57 - Percentage of Louisiana nursing homes that had repeated problems with the cost reports they submit to the state. (Source: Louisiana Legislative Auditor)

The U.S. Senate could vote as early as Thursday on legislation that would add $1.4 trillion to deficits over a decade and raise taxes on many middle-class families while sharply cutting taxes for the wealthiest families and corporations. The Washington Post’s Damian Paletta reports that major revisions could be coming in an effort to win over GOP holdouts.

There are numerous members demanding changes, and their needs don’t all overlap. Together, the requests put Republican leaders in a difficult position, as they attempt to accommodate individual holdouts on a one-off basis without losing other members or creating a situation in which the bill collapses under the weight of disparate demands. … The bills, as they make their way through Congress, would impact the taxes paid by virtually every American family and business. The Senate bill would also repeal the individual mandate requirement in the Affordable Care Act, potentially having an immediate impact on penalties, insurance premiums, and health insurance decisions for millions of Americans.

Chye-Ching Huang of the Center on Budget and Policy Priorities reports that the Senate bill is even more generous to corporations than previously thought due to a special trigger provision.

Under the trigger, if revenues meet specified levels after nine years, certain revenue raisers in the bill will automatically expire — retroactively for 2026 and then going forward. That would give businesses even larger tax cuts than they’d already receive under the bill: $45 billion more for 2026 and $79 billion more for 2027. Although Republicans argue that their trigger is fiscally responsible, the fact remains that it can only make things worse, relative to the Joint Committee on Taxation estimate that the bill already adds about $1.4 trillion to deficits over ten years. The bill, by the way, includes no provision to trigger tax increases in case revenues fall short of specified targets.

The Advocate’s Bryn Stole takes a deep dive into the competing analyses, but notes that even the most optimistic projections found that the tax cuts will eat deeply into federal revenues, with predictable results.

The nonpartisan Congressional Budget Office noted the tax bills would trigger automatic across-the-board spending cuts under the 2010 Pay-As-You-Go Act (or PAYGO), a federal law designed to limit future increases in the federal debt. Unless Congress moves to waive the PAYGO rules, the House tax plan would trigger $136 billion in cuts to a wide range of areas, including $25 billion from Medicare, as well as from student loan programs and federal agricultural subsidies. But even if Congress waives the PAYGO cuts, the drop in future tax revenue and growing federal deficit would create growing pressure in coming decades to slash entitlement programs like Medicaid or hike taxes on future generations, said Jan Moller, executive director of the Louisiana Budget Project, which advocates for low- and middle-income families in the state. “Like the House Republican tax plan, the tax cuts the Senate has proposed for the wealthiest among us would cause federal deficits to increase significantly,” said Moller. “This would set the stage for massive cuts to federal programs and services that serve seniors, veterans, children and people with disabilities.”

LBP has a round-up of the independent research on the tax plan in a new blog.


The real size of the fiscal cliff

A basic question looms over the ongoing negotiations between legislative leaders and Gov. John Bel Edwards’ administration over possible solutions to Louisiana’s fiscal problems: How big is the actual problem? To hear politicians tell it, Louisiana needs to find about $1 billion in new revenue to replace expiring taxes. But the actual budget shortfall for the 2018-19 fiscal year is quite a bit larger ($1.52 billion) and the expiring tax revenue is $1.38 billion (both figures from the House Fiscal Division). The Advocate takes note of the discrepancy in a Sunday editorial:

It’s worrisome that lawmakers at least in public are no nearer an agreement on the tax changes, despite a series of public and private meetings over the summer and fall. We see a real problem in folks not recognizing the scope of the disaster if deadlock continues to be the agenda for 2018. Nick Albares, policy analyst for the liberal Louisiana Budget Project, produced a useful primer about the numbers. While his group has specific policies in mind that are probably different than what would be embraced by the more conservative House GOP leadership, the Cliff’s Notes version of his analysis remains useful.

The AP’s star reporter, Melinda Deslatte, looks at the recent dispute over Louisiana’s Medicaid managed care contracts and concludes that it’s tough to find common ground between Edwards and the conservative Republicans who lead the House.  

The two sides seem unable — or unwilling — to see eye-to-eye on matters of state finances, an indication that compromise likely will be difficult to reach on another round of haggling over taxes to balance the state budget in the spring. The latest financial feud centers on $15.4 billion in Medicaid contract extensions sought by the governor to continue having five private companies manage the care of 90 percent of Louisiana’s Medicaid patients, about 1.5 million people, half of them children.


Poverty is not a serious sin

While the fate of the GOP tax bill is leading the debate in Washington this week, efforts are underway to undermine the federal safety-net that helps families that are down on their luck put food on the table and a roof over their heads. Nola.com/The Times-Picayune columnist Bob Mann spotlights the efforts of U.S. Rep. Garret Graves of Baton Rouge, who is seeking a work requirement for food recipients and “slanders poor people as lazy.”

That is false and an ugly slur. Most poor people work more hours at their jobs than does Graves. Moreover, there are precious few examples of low-income assistance programs that discourage work. A wealth of research proves that a job is almost always more profitable than government help. In particular, SNAP rules contain significant, effective work incentives. For every dollar a SNAP recipient earns, benefits decline by 24 to 36 cents. That makes work profitable. SNAP imposes a gradual, sliding scale reduction of benefits that encourages work and supports families moving toward self-sufficiency. Lest you allow Graves and his callous compatriots to fool you into thinking recipients enjoy lavish meals with their benefits, SNAP provides, on average, $1.40 per person per meal.


Nursing homes slow to change

The daily Medicaid payments to Louisiana nursing homes increased 54 percent from 2006 to 2016, even as the quality of care in the private facilities remained among the worst in the nation. That’s according to a legislative audit released last week that pointed out how the state could save $76 million per year through some simple reforms. The inimitable Jim Beam of the Lake Charles American-Press has more:

Unfortunately, Louisiana law and the state constitution give nursing homes protections that other health care providers don’t enjoy. A 2014 state constitutional amendment  guarantees nursing homes their rates won’t be decreased and that rates have to be increased at least every two years. Meanwhile, in Louisiana there are 45,000 elderly and developmentally and physically handicapped people on waiting lists for home and community-based health care, which most people prefer. However, nursing homes get preferred funding over those alternatives.


Number of the Day

57 – Percentage of Louisiana nursing homes that had repeated problems with the cost reports they submit to the state. (Source: Louisiana Legislative Auditor)