Congress Sends Tax Bill to the White House
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.
Obamacare’s Dirty Secret: 31 Million Still Can’t Afford Treatment
The president’s healthcare law sliced America’s uninsured rate down to historic lows by expanding coverage for tens of millions of Americans. At the same time, however, the number of insured people who still lack affordable, robust coverage is rising sharply as more people buy into high-deductible policies.
A new study from the Commonwealth Fund reveals that about 23 percent of Americans with coverage are considered underinsured—up from 12 percent in 2003. That means roughly 31 million Americans who bought health insurance still have trouble affording treatment under their policies.
The researchers at the Commonwealth Fund defined “underinsured” people as having out-of-pocket costs that total 10 percent or more of their annual income, or a deductible that is 5 percent or more of their income. The study concluded that high-deductible policies are likely the culprit behind this massive influx of underinsured people.
The findings are a huge problem for the Obama administration since the entire goal was to expand access to coverage to millions of Americans that they presumably would use instead of delaying treatment. But a handful of recent studies show that even people with health insurance are delaying treatment because they can’t afford it.
Related: High Deductible Plans Have More People Delaying Treatment
A December Gallup Poll showed at least 38 percent of insured, middle-income people, said they had delayed medical treatment because of the cost. “While many Americans have gained insurance, there has been no downturn in the percentage who say they have had to put off needed medical treatment because of cost,” Gallup’s Rebecca Riffkin wrote in a post on the pollster’s website.
The shift toward cost-sharing and high-deductible policies—defined by the Internal Revenue Service as those with annual deductibles of $1,300 or more for individuals and $2,600 for families--is widespread among exchange policies but also employer plans.
The Commonwealth Foundation’s study, unsurprisingly, reveals that low-income people with coverage are about twice as likely to be “underinsured” than people earning more than 200 percent of the poverty line.
Of course, it’s important to note that while affordability continues to be an issue, significantly more people do have health insurance because of the law.
Why That Annoying Fraud Alert Is Still a Good Thing
As credit card fraud has skyrocketed, issuers suspecting suspicious activity have become increasingly vigilant – sometime maybe too vigilant.
In many cases, fraud alerts are preventing consumers from making legitimate purchases. More than two-thirds of Americans who have received a fraudulent activity alert from their credit or debit card issuers have received at least one that’s inaccurate, according to a new study from CreditCards.com.
Still, card issuers have good reason to be cautious. This week, credit card scoring and analytics firm FICO said that the number of attacks on debit cards used at ATMs hit the highest level in 20 years during the first quarter of 2014
Related: How to Beat Credit and Debit Card ID Thieves
Americans remain extremely concerned about their personal data when shopping in stores, so many accept the inaccurate fraud alerts as a necessary hassle. “Most consumers we have spoken with seem to be okay with this trend,” CreditCards.com senior industry analyst Matt Schulz said in a statement.
You can avoid having your card blocked from legitimate purchases by calling your issuer or visiting their Web site to let them know you’ll be traveling, since purchases made from a new geographic area often send a red flag to card companies. Some issuers also offer text message alerts, so you can quickly and easily unblock a card for your transactions.
If you think you’ve been a victim of fraud (or if your cards have been physically lost or stolen), call your issuer immediately – most have 24/7 call centers dedicated to fraud.
Cancer Charities Exec Stole $187 Million for Personal Use
Donors who have given money to four of the largest cancer charities in the United States may have unknowingly been financing the lavish lifestyle of the C.E.O. who runs them—paying for luxury cruises, elite gym memberships instead of treatment for cancer patients.
That’s according to a suit filed Tuesday by the Federal Trade Commission as well as attorneys general in all 50 states, which alleges that James Reynolds deceived and defrauded donors out of more than $187 million between four of his charities—including the Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society.
Related: Medicare Recovers Nearly $28 Billion in Fraud Since 1997
The complaint says that the scheme started in the 1980’s. The charities told donors via telemarketing calls that their money would go toward medicine and transportation for cancer patients. However, most of the money actually went toward Reynolds’ personal indulges.
The complaint says that between 2008 and 2012, only three percent of donations actually went to cancer patients.
The FTC also accuses the organizations of cooking their books and reporting inflated revenues as well as “gifts in kind” that they said they distributed internationally.
The FTC said two of the charities—the Children’s Cancer Fund of America and the Breast Cancer Society plan to settle the charges out of court. The Associated Press reported that the Breast Cancer Society, posted a statement on its website Tuesday blaming increased government scrutiny for the charity's downfall.
"While the organization, its officers and directors have not been found guilty of any allegations of wrongdoing, and the government has not proven otherwise, our board of directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices," the statement said.
Several executives who were also involved in the sccheme, including Reynolds’ son, have agreed to a settlement, which bans them from working in fundraising or charities. The two charities that settled, Breast Cancer Society and the Children’ Cancer Fund of America will be dissolved.
The settlement also orders a $65,664,360 judgment, which is the amount consumers donated between 2008 and 2012. Reynolds junior’s judgment will be for suspended once he pays $75,000. Meanwhile the legal proceedings for Reynolds’ senior and the two remaining charities are ongoing.
Former CBO Chief: Congress Never Meant to Limit Obamacare Subsidies
A Supreme Court ruling expected this summer will determine whether the federal government can subsidize the insurance costs of individuals in states that did not establish their own health care exchanges under the Affordable Care Act.
Douglas Elmendorf was the director of the Congressional Budget Office when Congress debated the bill, and on Tuesday he provided some ammunition to backers of the law who insist that that Congress did not intend to prevent payments of subsidies to consumers in states using the federal exchange.
Related: How Obamacare Could Be Squeezing Consumer Spending
In an interview with CNBC’s John Harwood at the Peter G. Peterson Foundation’s 2015 Fiscal Summit*, Elmendorf said that before the ACA passed, the CBO analyzed the bill for members of Congress, many of whom were powerfully opposed to it. At the time, he said, there was a common understanding on Capitol Hill that the subsidies would be available to states regardless of the status of their exchanges.
“That analysis was subject to a lot of very intense scrutiny and a lot of questions,” he said. “My colleagues and I can remember no occasion on which anybody asked why we were expecting subsidies to be paid in all states regardless of whether they established exchanges or not. And if people had not had this common understanding…then I’m sure we would have had a lot of questions about that.”
Pressed by Harwood, Elmendorf added, “My colleagues and I talked to a lot of people, with a lot of questions about nearly every aspect of the analysis that we did…and we could not remember anybody asking us any questions about what would happen in the federal exchange different from what would happen in the state exchanges.”
Even so, the language of the law states that the subsidies would apply to exchanges “established by the State” and the Supreme Court will decide how literally those words must be interpreted.
*Pete Peterson also funds The Fiscal Times.
‘Spider Rain’ as Millions of Baby Arachnids on Web Parachutes Fall from Sky
Imagine waking up to millions of baby spiders raining down from the heavens. It sounds like Charlotte’s Web meets Cloudy with a Chance of Meatballs – only a whole lot creepier.
Yet that’s exactly what happened in rural Golburn in the Southern Tablelands of New South Wales, Australia, according to The Sydney Morning Herald.
Ian Watson of Golburn told the paper that he looked up and saw a sky full of little black spiderlings and a tunnel of webs going up for hundreds of meters.
Related: The Five Most Dangerous States to Work In
An Australian naturalist said what’s called “ballooning” is a migration technique used by baby spiders, which climb up on a plant and release a streamer of silk web that is caught by the wind and carried away.
Martyn Robinson of the Australian Museum said the traveling spiders can go quite a distance, and that’s why there are spiders on every continent. They even land in Antarctica, he said, though they don’t last long.
Rick Vetter, an arachnologist, told the website LiveScience that "ballooning” is not unusual among certain types of spiders, but people just don’t notice it.
What is unusual, biology professor Todd Blackledge of the University of Akron in Ohio told LiveScience, is for millions of spiders to be blowing in the wind at the same time. He said the mass migration may have been caused by a sudden change in the weather that carried so many spiders aloft all at once.
The Washington Post says other incidents of so called spider rain have occurred recently in Texas, Brazil and another town in Australia.