Budget & Taxes

Shutdown Likely as Paul Prevents Budget Vote

“The federal government on Thursday night slid toward at least a brief shutdown as a single Republican senator, Rand Paul of Kentucky, held off a vote on a far-reaching budget deal that would stave it off,” the New York Times reports.

“Angered at the huge spending increases at the center of the deal, Mr. Paul delayed the vote for hours with a demand to hold a vote on an amendment.”

Washington Post: White House tells agencies to prepare for shutdown as budget bill stalls.

Suddenly Deficits Don’t Matter Again

Jonathan Chait: “During the Obama era, Democrats frequently believed, but only rarely uttered aloud in official forums, that the Republican Party was engaged in economic sabotage. Not a coldly conscious plot, exactly. But it seemed just a little too convenient that the party had reversed its fiscal ideology at precisely the time when doing so would damage Democrats and thereby smooth the GOP’s return to power.”

“Now that Republicans have reversed their position once again, also in a way that happens to redound to their political benefit, the answer seems a little more clear. Republicans have used their control of government to virtually double the budget deficit, which had been hovering around half a trillion dollars per year, and will now likely run well over $1 trillion — during the peak of an economic expansion. There is no economic rationale for this behavior. Their policy is simply to support fiscal contraction under Democratic presidents and fiscal expansion under Republican ones. Cynicism is the only basis to explain their behavior.”

All Eyes on Democrats as Budget Vote Nears

Politico: “The Senate will go first and is expected to pass the bill with relative ease. One wrinkle emerged Thursday afternoon with Sen. Rand Paul (R-KY) blocking speedy consideration of the measure until he gets a vote on an amendment to keep Congress under strict budget caps. Still, Senate GOP leaders believe they can work things out with Paul.”

“But the plan could unravel in the House, where conservative opposition is forcing Republican leaders to lean on Democrats for votes as House Minority Leader Nancy Pelosi digs in with immigration demands.”

Washington Post: “Ryan suggested in a radio interview Thursday that he would be able to deliver a majority of Republicans — about 120 votes — meaning about half of the 193 Democrats might be necessary to pass the deal. That could be a tough sell among House Democrats, who are livid that their demands for protections for ‘dreamers’ — immigrants brought to the United States as children now living in the country illegally — were not made part of the deal.”

USA Today: “With the clock ticking toward a midnight funding deadline, Senate leaders said they could not provide any update about the timing for a vote.”

Republicans Completely Reverse Themselves on Deficit

Washington Post: “Republican lawmakers in 2011 brought the U.S. government to the brink of default, refused to raise the debt ceiling, demanded huge spending cuts, and insisted on a constitutional amendment to balance the budget.”

“On Wednesday, they formally broke free from those fiscal principles and announced a plan that would add $500 billion in new spending over two years and suspend the debt ceiling until 2019. This came several months after Republicans passed a tax law that would add more than $1 trillion to the debt over a decade.”

“With all these changes, the annual gap between spending and revenue in 2019 is projected to eclipse $1.1 trillion, up from $439 billion in 2015. And they are expanding the deficit at an unusual time, when the economy is growing and unemployment is low, a dynamic that often leads to shrinking budget gaps.”

Is Spending Bill a Signal Ryan Is Out?

Playbook: “When Paul Ryan was about to take the speakership from John Boehner, he railed against a package just like this. He took some heat yesterday in a closed Republican meeting from lawmakers who felt cut out by the process by which this bill was put together. He’s now putting this bill on the floor, and urging Republicans to vote yes. There’s a lot of chatter that a man seeking another term as speaker would never put this bill on the floor. At the moment, it’s just that — chatter. Ryan has said he’ll decide on his re-election in the spring after a conversation with his wife.”

Congress Attempts to Pass a Two-Year Spending Bill

Playbook: “Yes, this bill averts a shutdown, but that’s only a tiny sliver of what it does. It sets the stage to boost spending by roughly $300 billion over the next few years. It kicks in another at least $80 billion in disaster spending — even most Texans seem pleased, at the moment. And it suspends the debt limit until March 2019 — basically, telling Congress it can spend whatever amount of money it wants between now and then. That’s a big win for Republicans who don’t want to have to vote on the debt limit again before the midterm election.”

“The Senate is expected to take up — and pass — this bill in the early afternoon. They’ll probably pass this bill with 70-plus votes, and then leave town for the weekend.”

“Per Usual, the House is where this gets tricky. In order for this to pass, it will need to attract significant support from Democrats and Republicans alike. On the Republican side: we’ve heard estimates that anywhere from 120 to 150 Republicans will vote yes (the House has 238 Republicans). That would mean that, on the low end, roughly 70 Democrats would need to vote yes. (There are 193 Democrats.)”

Senate Leaders Agree on Two-Year Budget Deal

“Senate leaders have reached an agreement on a two-year budget deal, adding billions of dollars in federal spending,” the Washington Post reports.

“The bipartisan accord would lift statutory budget limits by more than $200 billion and provide tens of billions of dollars in disaster relief funding. Senate leaders unveiled the deal Wednesday after months of negotiations — and after Senate Democrats agreed to set aside immigration policy demands.”

“The plan still faces head winds — particularly in the House, where conservative Republicans are balking at the increased spending and liberal Democrats want further assurances on immigration.”

Senate Nears Two-Year Budget Deal

“Top Senate leaders were working to finalize a sweeping long-term budget deal that would include a defense spending boost President Trump has long demanded alongside an increase in domestic programs championed by Democrats,” the Washington Post reports.

“As negotiations for the long-term deal continued, the House passed a short-term measure that would fund the government past a midnight Thursday deadline and avert a second partial shutdown in less than a month.”

Why the GOP Won’t Pass a Budget

Stan Collender: “The White House and congressional GOP insisted the big tax cut bill would pay for itself so there would be no negative impact on the federal deficit or national debt. They also said the Trump/GOP economic plans would result in a balanced budget within 10 years. The fiscal 2019 budget resolution — the one Congress is supposed to debate and adopt this year — would be the first one considered since the tax bill was enacted and, therefore, the first with projections that should validate and confirm those promises.”

“That means House and Senate Republicans should be rushing to get it done, take another victory lap and prove themselves to be budget seers, sages, oracles and truth tellers. But the GOP is doing the exact opposite.”

“So why isn’t the GOP going to do a budget? Because the vote on the 2019 budget — the last one Congress will consider before the 2018 midterm elections — will reveal that all the Republican promises on the deficit and debt, including its blind belief on dynamic scoring, were completely bogus.”

Pentagon Lost Track of Hundreds of Millions

“One of the Pentagon’s largest agencies can’t account for hundreds of millions of dollars’ worth of spending, a leading accounting firm says in an internal audit obtained by Politico that arrives just as President Donald Trump is proposing a boost in the military budget.”

“Ernst & Young found that the Defense Logistics Agency failed to properly document more than $800 million in construction projects, just one of a series of examples where it lacks a paper trail for millions of dollars in property and equipment. Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it’s responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.”

Another Government Shutdown Looms

Playbook: “The government runs out of money Thursday. There is little expectation that Congress will be able to find a path forward on a long-term budget deal and DACA this week. Onec again, look for Republicans to tee up a short-term funding bill as soon as tomorrow. This is getting harder and harder for conservatives to swallow. But senior Republican leaders seem to think they could squeeze a funding bill to keep the government open until the end of the month through the House with only GOP votes.”

“Our best guess: They squeeze the funding bill through the House after a few fits and panics. Maybe they add some defense spending to the bill to sweeten it for conservatives. And then the Senate — which seems hell-bent on avoiding a shutdown scare — clears it without much fanfare.”

Tax Bill Is Only as Popular as Trump

Amy Walter: “For all the spinning and posturing there remains a fundamental challenge for the Republicans: the tax bill won’t become more popular unless the president becomes more popular. In fact, if you look at national support for the tax legislation, you will see that it lines up almost exactly with voters’ overall perception of the president.”

“In other words, if you like the president, you like the tax reform legislation. If you don’t like Trump, you either don’t like the bill or you are undecided about it. It is a reminder that whatever the president touches carries his polarizing brand.”

“Even as voters are overwhelmingly positive about the economy, it doesn’t translate to their opinions of the president or the tax law.”