While You Were Tweeting

I trust that you all had an enjoyable Thanksgiving weekend.  In many ways we have so much to be thankful for so it is always nice to take time out and to reflect on our good fortune — whatever form that may take.

In our nationally induced tryptophan haze, one may have noticed, or more hopefully ignored, a bevy of tweets and other distractions that obscure the many important legislative challenges coming up in the next four weeks.  Or more accurately, in the few days that the House and Senate are actually in session before Christmas.  Nearly all of the following impact Americans in some form or another and are important to the smooth functioning of our nation.  These are important issues that deserve serious consideration and discussion.  I will let you decide whether or not that will happen.

To name a few:

• Tax cuts.  The president promised a “great big beautiful Christmas present” with completion of the Republican tax cut.  Both the House — which passed its version before Thanksgiving — and the Senate — which hopes to pass its version this week — have significantly different bills designed to permanently cut corporate taxes and to cut some lower and middle class taxes for a while.  The Republican leadership is touting both bills as a boon to the middle class.  Sorry, but I don’t see it.  Besides adding at least 1.5 trillion dollars to the national debt over the next ten years, it makes some puzzling changes.  For example, nearly all deductions (mortgage, student loan, state and local taxes, medical expenses, moving expenses and about 40 some more) are removed from the individual taxpayers’ ability to use them but keeps them in place for corporations.  The argument is that the individual standard deduction will greatly increase (roughly doubled) and therefore there will be no need to itemize.  At the same time, corporate taxes drop roughly 40 percent (from 35% to 20%) but they still keep all itemized deductions, including those listed above that go away for the rest of us.  The real kicker is that corporate tax rates and rules are permanent and the rules for the rest of us are temporary.  The non-partisan Tax Policy Center (TPC) estimates that for many of us, our taxes will actually go up over the next ten years as compared to current law.  This happens primarily because of the “sunset” provisions impacting everyday Americans.  Many Republicans are arguing that some time “in the future” Congress will make them permanent and so in the end, we all benefit.  Except.  Except.  There is no guarantee that they will become permanent.  If they don’t, we are victims of a big lie.  And if they do, then it all has been a sham and a trick.  In order to meet the rules of the Senate, they cannot exceed the 1.5 trillion dollar addition to the national debt.  (To do so, they need 60 votes in the Senate, which means getting Democrats onboard, who, so far, have been shut out of any input to the bill.)  Thus, the permanent cuts for corporations are paid for by the average tax payer.   But not to worry, according to the Director of the Office of Management and Budget (OMB) Dick Mulvaney, it is all a trick.  A “gimmick.”  As he said on Meet the Press, in order to meet the Senate rules, “certain proposals can only have certain economic impact.  One of the ways to game the system is to make things expire.”  Or as he went on to say, “a lot of this is a gimmick… to get through these rules in the Senate.”  This from the president’s point man on the cuts and in charge of explaining them to the public.  There is a whole lot more to this issue, but it deserves a separate piece as the issues are complex with wide impacts on each of our futures.  Keep an eye on this.

(Please note that there is no need to place a time limit on getting this legislation right. It is an arbitrary political goal to “deliver” a tax cut by Christmas.  Remember that as it crowds out the following issues, many of which do have — or have already reached — a drop dead date to accomplish.)

• Government Shutdown.  Funding to operate the federal government expires on 8 December.  Here we go again.  Both Republicans and Democrats are using the imminent expiration of the spending authorization to promote their political agendas.  As in the past, it is unlikely that the Republicans can pass a spending bill without at least some Democrats voting for it as well (there is always a hard-core Republican group opposed to the amount of spending and the impact on the deficit — although they mysteriously voted for the increased deficit from the tax cuts).  There is a “summit” planned tomorrow involving the leaders of both parties from both houses and the president to try to come to accommodation on this and other issues.  Probably there will be a short-term extension to keep the government operating — a continuing resolution or CR.  CRs wreak havoc on all government agencies from defense to agriculture as they limit immediate spending and give no clear guidance for the future, thus severely inhibiting planning for the future.  Predictions are not optimistic as to a quick resolution because the Republican leadership remains laser focused on getting the tax cuts finished first.
• Defense Spending.  As part of the overall objective of setting spending levels for 2018 many want to see defense spending increased from about $549 billion to about $600 billion.  In order to do that, Congress must rescind a bipartisan 2011 budget deal that set spending caps on all areas of government.  Democrats are insisting that any increases in defense spending must be matched by increases in non-defense spending or they will not vote to lift the 2011 caps.  Under Senate rules, 60 votes are required to change the bipartisan agreement providing the limits so Democrats have a say in how this is resolved.  Very little progress in resolving the issue is apparent and this impacts the funding for the government as a whole (see above).
• Health Care. Politicians on both sides of the aisle want to see the market stabilized for health care.  Not surprisingly, there are differences on how to do it.  The Alexander-Murray health care bill is a bipartisan effort to bring some continuity and stabilization to health care under the Affordable Care Act (ACA).  The administration opposes this bill and the Senate version of the tax cut plan eliminates the penalty for not having insurance — thus creating the possibility of increased premiums for those with insurance and eventually driving a predicted 13 million from the roles.  (See my previous posts about the “three-legged stool” needed to keep the system stable.)  Democrats say the Alexander-Murray bill is off the table if the repeal of a key provision of the ACA is enacted.  Republicans are still making noise about “repeal and replace in 2018.”  Compromise seems unlikely and the public suffers.
• The Children’s Health Insurance Program.  The generally popular CHIP provides health coverage for about 9 million poor children and others.  The current legislation expired on 30 September and it is unknown when this usually bipartisan issue will be addressed.  To date, the states have picked up the slack to keep the program going in the short-term but many say that funds will run out at the end of the year.  This is also caught up in the “need” to address tax cuts before other legislation.
• Immigration.  The president announced the expiration of the Deferred Action for Childhood Arrivals (DACA) (the Dreamers) program last September and gave Congress until March to come up with a system for dealing with the children brought here illegally by their parents.  Many Democrats say that they will not vote for any spending bills unless this issue is addressed by the end of the year.  Some Republicans say that they will not address immigration unless “The Wall” is part of the bill.  There are also Republicans that agree that the Dreamers issue needs to be addressed and that may actually favor their remaining in the country.  But, again, they argue this cannot be part of any spending bill and can only be addressed after the tax cuts pass.
• Intelligence Gathering.  On 31 December of this year Section 702 of the Foreign Intelligence Surveillance Act will expire.  This section of the law, approved by Congress in 2008 as a part of the response to the terrorist attacks on 11 September 2001, is intended as a tool to track and thus foil foreign terrorists.  It is meant for use in conjunction with foreign citizens outside of the United States and has specific provisions to protect American citizens.  Unfortunately, critics of the provision claim that vast amounts of information is collected on U.S. citizens as they communicate with foreigners — any foreign national, not just those suspected of being terrorists.  Known as “incidental surveillance” it raises many questions of privacy and government intrusion into the lives of innocent, ordinary U.S. citizens.  The NSA considers this provision to be among their most important collection capabilities and fear that if they lose the ability to continue the surveillance that it will severely inhibit their counter-terrorism capability.  There is general bipartisan support to extend the statute, but with some restrictions to further try to protect Americans’ privacy.  Currently, there are no plans to address the expiring statute by the end of the year.
• Disaster Relief.  The Administration asked Congress for $44 billion in disaster relief for help in mitigating the impact of the hurricanes and wildfires that affected many areas of the country this year.  To pay for it, they have asked for reductions in other expenditures, such as benefit programs.  By all accounts, 44 billion — a lot — is inadequate to meet the need.  Puerto Rico alone estimates that it will cost $99 billion to get the island back on its feet.  Congress has promised to provide the aid, but does not plan to address the issue with concrete action (money duly appropriated) until the tax cut plan is finished.
• Iran Sanctions.  By declaring in October that Iran was not in compliance with the international deal to limit Iran’s ability to develop nuclear weapons, the president activated a 60 day period which expires in December for Congress to act to impose new sanctions or not.  The general sense is that there is mostly bipartisan agreement not to extend new sanctions on Iran and thus to keep the deal in place.  However, at the end of the 60 day period the ball is back in the president’s court and it may be that inaction on the part of Congress will lead to action by the president and thus put the deal in jeopardy.

And there’s more!  But you get the idea.  Not much of anything will get done until the tax cuts are passed, which is not a sure thing in the Senate.  Even if it does get through the Senate this week, or soon after, they still need to reconcile the two versions of the bill — no easy task as they are significantly different in several important areas.  All deadlines discussed for the tax cuts are purely political and self-imposed, unlike many other items in need of Congressional attention.

It is sure to be a busy political December.  Enjoy!  And don’t let the tweeting distract you from the real action going on.