Budget & Taxes

Republicans Bet Their Majorities on a Tax Cut

Matthew Continetti: “Republicans want to tie the strong economy to the tax cut they passed last December. This is the most powerful weapon they have in the coming election, not just because the policy appears to be succeeding, but also because it’s the only major achievement of the 115th Congress. Republicans are keeping track of how many companies have pegged bonuses, raises, or 401(k) perks to the tax cut—the number currently stands at 348. They urge voters to “check their check,” beginning this week, to see the extra take-home pay the cut has given them. And they are telling candidates to highlight the impact on everyday people: Christmas toys purchased, vacations enjoyed, and small businesses expanded as a result of a policy the GOP embraced but every Democrat in Congress voted against.”

First Democratic Campaign Ads on the Tax Law

A Democratic super PAC unveiled these two television ads — in Indiana and Missouri — backing the endangered Senate incumbents.

Both ads feature the same message: The tax law gives 83% of the benefits to the richest one percent of the population while adding $1.5 trillion to the national debt. And to pay for it, there’s Republicans plan to cut Medicare.

Trump Endorses 25-Cent Gas Tax

Jonathan Swan: “President Trump endorsed a 25-cent gas tax hike to pay for infrastructure at a White House meeting this morning with senior administration officials and members of Congress from both parties… Trump also said he was open to other ways to pay for infrastructure.”

“Trump’s gas tax idea appears dead on arrival. Republicans aren’t about to hike taxes for the Trump voters driving their pickup trucks to work every day.”

Republicans Have Forgotten They Hate Deficits

New York Times: “In a year of controlling power in Washington, President Trump and Republicans in Congress have run up federal spending, approved deficit-swelling tax cuts and presided over a marked increase in ‘policy uncertainty’ in the economy. They still talk about the importance of fiscal discipline, but they have yet to enforce it.”

“The $4.4 trillion budget Mr. Trump released on Monday spends as much over 10 years as any budget offered by President Obama, whose policies Republicans blamed for ballooning the size of the federal government and hobbling the economy. It does not attempt to achieve balance at the end of that time, despite optimistic economic growth projections that far exceed what most economists say is possible.”

“Instead, it projects that deficits will grow $7 trillion over the next decade as the United States continues borrowing huge sums of money — a number that could double if the administration turns out to be overestimating economic growth and if the $3 trillion in spending cuts the White House has floated do not materialize in Congress.”

Top U.S. Spy Issues Dire Warning to Congress

Director of National Intelligence Dan Coats told Congress that this year’s midterm elections are a “potential target” for Russian influence operations, Bloomberg reports.

Said Coats: “We assess that the Russian intelligence services will continue their efforts to disseminate false information via Russian state-controlled media and covert online personas about U.S. activities to encourage anti-U.S. political views.”

Just days after President Trump signed a $300 billion budget hike, Coats also warned that the national debt is “unsustainable” and a “dire threat” to national security.

Trump Seeks Deep Budget Cuts for Domestic Programs

“President Trump is expected to renew his call for drastic reductions to nondefense programs in rolling out his budget request Monday, even with hundreds of billions in new cash at hand,” Politico reports.

“While Congress busted strict spending caps last week — allowing for an extra $300 billion to be spent over the next two years — the Trump administration is still urging severe austerity for some arms of the federal government. Trump’s budget will lay out ‘an aggressive set of spending reforms’ to reduce the deficit by $3 trillion over a decade, according to a preview released by the White House on Sunday.”

Playbook: “The White House’s budget is especially irrelevant this year. In most years it’s treated with an eye roll. But this year, the president just signed a two-year spending framework into law.”

Forget About Ever Balancing the Budget

Stan Collender: “In fact, also forget about even projecting a balanced budget 10 years from now as Congress and the White House like to do. A $1 trillion deficit in a total budget of about $4.5 trillion means that spending would have to be cut by more than 22 percent to get to balance. But with interest on the debt and military spending at about $1.3 trillion and not going to be reduced, the amount available to cut drops to $3.2 trillion and the percentage reduction increases to more than 30 percent. Economic growth, which is already projected to be high, isn’t going to make up the difference.”

“A balanced budget isn’t going to be possible and any pretense that it is will be dropped.”

The GOP Is the Party of Massive Budget Deficits

Associated Press: “Administration officials have downplayed the risk of simultaneously slashing taxes and boosting spending, arguing that the result will be faster growth that will then shrink the debt. But the higher deficits would come just as the Federal Reserve is on course to continue — and perhaps accelerate — the pace of its short-term rate hikes. The Fed’s rate increases will likely lead, in time, to higher borrowing rates for consumers and businesses and likely slow economic growth.”

“The market’s plunge over the past week was initially ignited by fears of higher inflation and interest rates. But investors have also had to consider a new threat: A two-year government funding deal that would add about $300 billion to budget deficits from higher spending. The Fed might have to respond by raising rates more aggressively to counter the stimulative effect of the spending increases.”

Quote of the Day

“The reason I’m here tonight is to put people on the spot. I want people to feel uncomfortable. I want them to have to answer people at home who said, ‘How come you were against President Obama’s deficits and then how come you’re for Republican deficits?'”

— Sen. Rand Paul (R-KY), quoted by the New York Times.

Congress Passes Deal to Reopen the Federal Government

“The House of Representatives approved a major budget deal early Friday morning, ending a brief government shutdown overnight and sending the measure to the President for his signature,” CNN reports.

“The House vote was 240-186. The GOP-controlled chamber needed help from House Democrats to clear the bill. The Senate approved the measure earlier on Friday morning.”