But on Capitol Hill this week, just hours before they jet away for the holidays, the GOP-led Congress is going on a $680 billion spending spree — none of which will be paid for by budget cuts or other tax offsets. And all of which will be added to the national debt, according to budget watchdogs.
“We are doing damage to the fiscal health of the country by borrowing this mind-boggling amount at a time when the debt is so high,” said Maya MacGuineas, president of the bipartisan anti-debt nonprofit Committee for a Responsible Federal Budget. “It’s absolutely at odds with the priority Republicans are making — the debt — when they’re campaigning, and with the Republican budget that was passed out of the House.”
For the GOP presidential candidates, the $18 trillion national debt remains a central campaign talking point. But after years of relative fiscal austerity, including enactment of relatively modest spending rollbacks, GOP lawmakers are steaming toward passing a mammoth $680 billion tax package without offsets. It would make permanent a host of temporary tax breaks commonly called “extenders” — and is also chock-full of goodies for specific business interests and constituents.
There’s something from everybody’s wish list: breaks for energy-efficient homes and commercial buildings; deductions for business office furniture, computers and machines; tax savings for the film and TV industries and rum producers in the Caribbean; and even tax perks for owning a racehorse or two-wheeled plug-in electric car.
The cost, combined with the interest the U.S. would pay after borrowing the money to pay for it, would rise to $830 billion and undo much of the savings squeezed from painful automatic spending cuts called the sequester, according to MacGuineas’ group. Republicans have instituted rules that block such measures unless they’re paid for — restrictions they will waive for themselves on this particular occasion.
Speaker Paul Ryan can count on strong support from Republicans to pass the measure, which he negotiated as one of his first acts since taking over the House. On Thursday, the House voted overwhelmingly, 318-108, to pass the measure, with dozens of Democrats joining Republicans to vote 'yes.' The Senate is expected to clear the bill on Friday.
It helps, perhaps, that national security issues have recently taken over the campaign spotlight, diverting some attention away from fiscal issues. But some Democrats are seizing on what they see as a disconnect between the GOP’s national platform and their end-of-year tax bill. And they’re calling the GOP hypocritical for failing to require the new spending to be offset with cuts elsewhere — particularly after spending years battling with President Barack Obama over deficits and spending cuts.
“If you’re concerned about the deficit, why do you write off all this money without an offset?” asked Rep. Peter DeFazio (D-Ore.).
Appropriations Committee member Mike Honda (D-Calif.), who often hears Republicans on his panel balk at spending for Democratic priorities, said reading the tax deal was “like being in a candy store.”
“I’m not voting for it,” he said. “There are so many things in there that raise astounding [amounts of] debt.”
Almost every year, Congress passes a series of what were supposed to be “temporary” tax breaks mostly aimed at businesses, including breaks for corporate research and development, wind and solar energy, railroad track maintenance and motor-sports equipment. But tax experts have long maintained that the year-by-year extensions are bad policymaking because they leave businesses guessing whether their provisions will be extended that year, adding uncertainty and making it more difficult to plan for the future.
Many of those experts, along with some members of Congress, have wanted to make them permanent. And this year, Republicans struck a deal with Democrats: Make some of our tax breaks permanent, and we’ll do the same for yours. (Democrats, for their part, got a permanent extension of their own beloved tax break for college students and an extension of those for lower-income individuals.)
The GOP also sees the package as a spoonful of sugar to help the medicine — a more than $1.1 trillion spending bill they have to clear before leaving town — go down. Lawmakers have to fund the government, a tough vote for conservatives who want to cut spending. To swallow it, GOP leadership threw in a tax package.
Despite its sizable price tag, many conservatives see the tax deal as a net positive.
“We’re making permanent some very key pro-growth provisions that are going to grow the economy,” said new Ways and Means Chairman Kevin Brady (R-Texas). “These are tax provisions we’re extending one year at a time; making the pro-growth provisions permanent doesn’t add any level of funding to our deficit. It’s simply honest budgeting going forward.”
The cost of them over a decade, he added is “right in the neighborhood of one year 10 times.”
The GOP is betting that, over the long haul, it will be worth the cost.
“We don’t score them because economic growth helps them. … We’ll get that back multiple times over in economic growth,” said Republican Study Committee Chairman Bill Flores of Texas, later adding that the tax breaks that are “niche, for a particular industry,” are extended only for a short term.
Rep. John Fleming (R-La.) said the package would let “business people plan their investments.” And Republican Rep. Joe Barton pointed out that part of the package includes a boon for his Texas constituents who pay more sales tax than income tax: the state and local sales tax deduction.
“I’m not a big fan of wind and solar [tax credits], but I’d still rather see dollars stay in the American economy than come to Washington, D.C.,” said Rep. Marlin Stutzman (R-Ind.).
But while budget watchdogs say there may be merit to many of the tax extenders, they argue that if lawmakers want to be serious about reducing the debt, they should find a way to pay for them.
“There is no way this will pay for itself, and there’s no justifying for not paying for it other than we don’t want to … and we take the easy way out,” said MacGuineas. “What we should be doing is the opposite of this.”
Of course, some Republicans disagree with the premise that tax breaks are a “cost” to begin with.
“I don’t buy into the premise that letting people keep more of their money is a cost — it’s their money,” snipped House Freedom Caucus Chairman Jim Jordan of Ohio.
Tax reform cheerleaders, however, will also note that a tax package that reduces rates for certain industries actually goes against the very purpose of comprehensive tax reform, which is to broaden the base, get rid of special interest loopholes and lower the rate for everyone.
But Republicans asked about the matter Wednesday waived that off for now.
“I’m not fine with it. It’s a deficit buster, but you know we’re going to have to back small businesses, so we might as well do the right thing for them” right now, said Rep. Dave Brat of Virginia.
Original Article
Source: politico.com/
Author: RACHAEL BADE
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