Congress Sends Tax Bill to the White House

Congress Sends Tax Bill to the White House

U.S. President Donald Trump speaks to the media after the Congressional Republican Leadership retreat at Camp David, Maryland, U.S., January 6, 2018. REUTERS/Yuri Gripas
YURI GRIPAS
By David Becker and Amanda Becker, Reuters

The Republican-controlled U.S. House of Representatives gave final approval on Wednesday to the biggest overhaul of the U.S. tax code in 30 years, sending a sweeping $1.5 trillion bill to President Donald Trump for his signature.

In sealing Trump’s first major legislative victory, Republicans steamrolled opposition from Democrats to pass a bill that slashes taxes for corporations and the wealthy while giving mixed, temporary tax relief to middle-class Americans.

The House approved the measure, 224-201, passing it for the second time in two days after a procedural foul-up forced another vote on Wednesday. The Senate had passed it 51-48 in the early hours of Wednesday.

Trump had emphasized a tax cut for middle-class Americans during his 2016 campaign. At the beginning of a Cabinet meeting on Wednesday, he said lowering the corporate tax rate from 35 percent to 21 percent was “probably the biggest factor in this plan.”

Trump planned a tax-related celebration with U.S. lawmakers at the White House in the afternoon but will not sign the legislation immediately. The timing of the signing was still up in the air.

After Trump repeatedly urged Republicans to get it to him to sign before the end of the year, White House economic adviser Gary Cohn said the timing of signing the bill depends on whether automatic spending cuts triggered by the legislation could be waived. If so, the president will sign it before the end of the year, he said.

The debt-financed legislation cuts the U.S. corporate income tax rate to 21 percent, gives other business owners a new 20 percent deduction on business income and reshapes how the government taxes multinational corporations along the lines the country’s largest businesses have recommended for years.

Millions of Americans would stop itemizing deductions under the bill, putting tax breaks that incentivize home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.

The bill keeps the present number of tax brackets but adjusts many of the rates and income levels for each one. The top tax rate for high earners is reduced. The estate tax on inheritances is changed so far fewer people will pay.

Once signed, taxpayers likely would see the first changes to their paycheck tax withholdings in February. Most households will not see the full effect of the tax plan on their income until they file their 2018 taxes in early 2019.

In two provisions added to secure needed Republican votes, the legislation also allows oil drilling in Alaska’s Arctic National Wildlife Refuge and repeals the key portion of the Obamacare health system that fined people who did not have healthcare insurance.

“We have essentially repealed Obamacare and we’ll come up with something that will be much better,” Trump said on Wednesday.

“Pillaging”

Democrats have called the tax legislation a giveaway to the wealthy that will widen the income gap between rich and poor, while adding $1.5 trillion over the next decade to the $20 trillion national debt, which Trump promised in 2016 he would eliminate as president.

“Today the Republicans take their victory lap for successfully pillaging the American middle class to benefit the powerful and the privileged,” said House Democratic leader Nancy Pelosi.

 few Republicans, whose party was once defined by its fiscal hawkishness, have protested the deficit-spending encompassed in the bill. But most of them have voted for it anyway, saying it would help businesses and individuals, while boosting an already expanding economy they see as not growing fast enough.

“We’ve had two quarters in a row of 3 percent growth,” Senate Republican leader Mitch McConnell said after the Senate vote. “The stock market is up. Optimism is high. Coupled with this tax reform, America is ready to start performing as it should have for a number of years.”

Despite Trump administration promises that the tax overhaul would focus on the middle class and not cut taxes for the rich, the nonpartisan Tax Policy Center, a think tank in Washington, estimated middle-income households would see an average tax cut of $900 next year under the bill, while the wealthiest 1 percent of Americans would see an average cut of $51,000.

The House was forced to vote again after the Senate parliamentarian ruled three minor provisions violated arcane Senate rules. To proceed, the Senate deleted the three provisions and then approved the bill.

Because the House and Senate must approve the same legislation before Trump can sign it into law, the Senate’s late Tuesday vote sent the bill back to the House.

Democrats complained the bill was a product of a hurried, often secretive process that ignored them and much of the Republican rank-and-file. No public hearings were held and numerous narrow amendments favored by lobbyists were added late in the process, tilting the package more toward businesses and the wealthy.

U.S. House Speaker Paul Ryan defended the bill in television interviews on Wednesday morning, saying support would grow for after it passes and Americans felt relief.

“I think minds are going to change,” Ryan said on ABC’s “Good Morning America” program.

Reporting by David Morgan and Amanda Becker; Additional reporting by Richard Cowan, Roberta Rampton, Gina Chon and Susan Heavey; Editing by Jeffrey Benkoe and Bill Trott.

Stat of the Day: 0.2%

U.S. President Donald Trump at the White House in Washington, U.S. January 23, 2018.  REUTERS/Jonathan Ernst
Jonathan Ernst
By The Fiscal Times Staff

The New York Times’ Jim Tankersley tweets: “In order to raise enough revenue to start paying down the debt, Trump would need tariffs to be ~4% of GDP. They're currently 0.2%.”

Read Tankersley’s full breakdown of why tariffs won’t come close to eliminating the deficit or paying down the national debt here.

Number of the Day: 44%

iStockphoto
By The Fiscal Times Staff

The “short-term” health plans the Trump administration is promoting as low-cost alternatives to Obamacare aren’t bound by the Affordable Care Act’s requirement to spend a substantial majority of their premium revenues on medical care. UnitedHealth is the largest seller of short-term plans, according to Axios, which provided this interesting detail on just how profitable this type of insurance can be: “United’s short-term plans paid out 44% of their premium revenues last year for medical care. ACA plans have to pay out at least 80%.”

Number of the Day: 4,229

U.S. President Trump delivers remarks in Washington
JONATHAN ERNST/REUTERS
By The Fiscal Times Staff

The Washington Post’s Fact Checkers on Wednesday updated their database of false and misleading claims made by President Trump: “As of day 558, he’s made 4,229 Trumpian claims — an increase of 978 in just two months.”

The tally, which works out to an average of almost 7.6 false or misleading claims a day, includes 432 problematics statements on trade and 336 claims on taxes. “Eighty-eight times, he has made the false assertion that he passed the biggest tax cut in U.S. history,” the Post says.

Number of the Day: $3 Billion

iStockphoto
By The Fiscal Times Staff

A new analysis by the Department of Health and Human Services finds that Medicare’s prescription drug program could have saved almost $3 billion in 2016 if pharmacies dispensed generic drugs instead of their brand-name counterparts, Axios reports. “But the savings total is inflated a bit, which HHS admits, because it doesn’t include rebates that brand-name drug makers give to [pharmacy benefit managers] and health plans — and PBMs are known to play games with generic drugs to juice their profits.”

Chart of the Day: Public Spending on Job Programs

Martin Rangel, a worker at Bremen Castings, pours motel metal into forms on the foundry’s production line in Bremen
STAFF
By The Fiscal Times Staff

President Trump announced on Thursday the creation of a National Council for the American Worker, charged with developing “a national strategy for training and retraining workers for high-demand industries,” his daughter Ivanka wrote in The Wall Street Journal. A report from the president’s National Council on Economic Advisers earlier this week made it clear that the U.S. currently spends less public money on job programs than many other developed countries.