Scrambling to Avoid a Christmas Shutdown

By Yuval Rosenberg and Michael Rainey House Votes to Avert Shutdown House Republicans, eager to avoid snatching defeat from the jaws of their tax-bill victory, passed a continuing resolution late Thursday to fund the government through January 19. The Senate is expected to vote tonight. Here's what you need to know: - The House also passed a separate $81 billion disaster relief bill. - The stopgap funding measure waives automatic "PAYGO" spending cuts triggered by the GOP tax bill. - The bill also provides $2.85 billion for the Children’s Health Insurance Program (CHIP) that had its funding expire at the end of September. “For a $12 billion to $14 billion program, this provides less than $3 billion for what is effectively six months,” the head of one child advocacy group [told The New York Times](. - Kicking the can into next year leaves a lot of issues unresolved — and a lot of lawmakers unhappy. “The legislation will push back delicate decisions on spending, immigration, health care and national security,” The Washington Post reports. - But lawmakers are eager to head home for the holidays. “We will get it all done today, and we will depart,” House Majority Leader Kevin McCarthy said, according to the Post. McConnell Says Welfare and Entitlement Reform Not on Senate’s 2018 Agenda President Trump and House Speaker Paul Ryan have said that welfare reform is on their to-do list for 2018. Mitch McConnell apparently has a different plan. The Senate Majority Leader on Thursday told Axios’s Mike Allen that he [“would not expect to see”]( welfare reform on the Senate GOP agenda next year. What will the Senate turn to? “We have to have Democratic involvement,” McConnell said. “So things like infrastructure … to do something in that area we’re going to have to have Democratic participation.” New York’s Ed Kilgore [translates]( “This is Washington-speak (McConnell’s native tongue) for an edict that the Senate leadership is ruling out the use of the budget reconciliation process — the procedure used successfully on tax cuts and unsuccessfully on health care this year — for an attack even on the less popular entitlements, in part because it would poison the well for any deals with Democrats on pleasant preelection goodies like infrastructure spending.” GOP Bill Removes Millions from the Tax Rolls in 2018 About 4.2 million additional taxpayers will escape federal income taxes in 2018, according to a new [analysis]( by the Tax Policy Center. Under the GOP tax plan, 45.8 percent of won’t pay income taxes or will get a net refund from the federal government, up from 43.4 percent under current law. Bloomberg’s [Sahil Kapur]( points out that this makes the tax bill “a base-shrinker, despite the ‘base-broadening’ rhetoric.” Over time, though, the effect fades due to the use of chained-CPI to measure inflation, which slowly pulls more taxpayers back onto the rolls. And with the expiration of many individual tax cuts in 2025, the bill ultimately would have 1.1 million more people paying income taxes in 2027 than would be the case under current law. Goldman Sachs and J.P. Morgan See Small GDP Boost from Tax Bill Goldman Sachs economists see the tax bill adding 0.3 percentage points to GDP growth in 2018 and 2019 while J.P. Morgan forecasts a similar gain of 0.3 percentage points next year and 0.2 percentage points the year after. Goldman’s analysts add that federal spending, which is likely to grow more quickly next year than it has recently, will bring the total fiscal boost to around 0.6 percentage points for 2018 and 0.4 percentage points in 2019. Both banks see deficits likely rising above $1 trillion, or about 5 percent of GDP, in 2019. From Cheers to Jeers, 8 Notable Reactions to the GOP Tax Vote Republicans were lighting cigars and popping champagne corks (metaphorically, of course) on the south lawn of the White House Wednesday as they celebrated the passage of their tax bill, the most significant overhaul of the tax code in 31 years and a massive political victory for a party that for much of this year seemed to be in turmoil. Reactions to the tax bill’s passage ranged from jubilation to despair, following fairly predictable partisan lines. Here are some of the more colorful statements about the bill from across the political spectrum: 1. President Trump [stuck it to his critics]( Thursday morning: “The Massive Tax Cuts, which the Fake News Media is desperate to write badly about so as to please their Democrat bosses, will soon be kicking in and will speak for themselves. Companies are already making big payments to workers. Dems want to raise taxes, hate these big Cuts!” 2. Senate Majority Leader Mitch McConnell [expressed confidence]( this will provide an election year boost: “From a Republican point of view, this is as good as it gets and we’re more than happy to take our argument [for the tax bill] to the American people in an election contest.” After the bill passed, McConnell quipped, “If we can’t sell this to the American people, we ought to go into another line of work.” 3. Democratic strategist Jesse Ferguson [said]( Republicans are heading for the rocks: “Calling this thing a win because Republicans finally got something done is like saying the captain of the Titanic won when he successfully found that reclusive iceberg.” 4. House Minority Leader Nancy Pelosi [called]( the tax plan “probably the worst bill in recent time to come to the floor.” 5. HUD Secretary Ben Carson [offered a prayer]( of thanks at the cabinet meeting Wednesday: “Our kind Father in heaven, we're so thankful for the opportunities and the freedom that you've granted us in this country. We thank you for the president and for Cabinet members who are courageous, who are willing to face the winds of controversy in order to provide a better future for those who come behind us. We're thankful for the unity in Congress, that presented an opportunity for our economy to expand, so we can fight the corrosive debt that has been destroying our future. And we hope that that unity will spread even beyond party lines, so that people recognize we have a nation that is worth saving. And nations divided against themselves cannot stand. In this time of discord, distrust and dishonesty, we ask that you will give us a spirit of gratitude, compassion and common sense. And give us the wisdom to be able to guide this great nation in the future. We ask in the name of the Father, the Son and the Holy Spirit, Amen.” 6. Novelist Stephen King made it clear that he is no fan of the legislation, [tweeting]( “The ‘tax cut bill’ is basically a little piece of candy on a long, shit-coated stick.” 7. Sen. John Tester [echoed]( King’s earthy sentiment: “We just passed one of the shittiest bills that’s ever come in front of the Senate last night… so you know the country’s seen better days." 8. Sen. Orrin Hatch [was effusive]( in his praise for Trump: "I have to say that you’re living up to everything I thought you would. You’re one heck of a leader, and we’re all benefitting from it. This bill could not have passed without you. ... If you stop and think about it, this president hasn’t even been in office for a year, and look at all the things that he’s been able to get done — by sheer will, in many ways. I just hope that we all get behind him every way we can, and we’ll get this country turned around in ways that will benefit the whole world, but, above all, benefit our people. … And I have to say, that this is one of the great privileges of my life to stand here on the White House lawn with the president of the United States, who I love and appreciate so much, and with these wonderful colleagues and Cabinet members who stand behind us. … And we’re going to keep fighting, and we’re going to make this the greatest presidency that we’ve seen, not only in generations, but maybe ever." Send Us Your Tips and Feedback: Email Yuval Rosenberg at yrosenberg@thefiscaltimes.com and follow me on Twitter [@yuvalrosenberg](. Follow The Fiscal Times on Twitter [@TheFiscalTimes](. Why a Tax Hike May Be on the Horizon The tax battle may be over for now, but it will likely start up again before too long. The American Enterprise Institute’s James Pethokoukis looks ahead to the next big tax move from Washington — and why it might just be a hike of some sort. “It’s hard to imagine another big deficit-financed tax cut happening anytime soon, especially as annual deficits enter trillion-dollar territory,” [he writes](. “Indeed, the next big battle might be keeping all these tax cuts in place if Democrats take control of Washington.” On the other hand, if Republicans do turn to cutting spending on welfare programs, Social Security and Medicare, they might then look to use some of the money saved from cuts to slash taxes again. “Keep in mind, however, that for Democrats to go along with spending cuts — to make the math work, really — there will have to be tax hikes,” Pethokoukis writes. The GOP is unlikely to go along with raising individual or corporate income tax rates, and alternatives for raising revenue, like a carbon or consumption taxes, will be difficult to push through. So it’s possible that smaller ideas, like expanding the Earned Income Tax Credit, might come up next, Pethokoukis suggests. But big-picture tax reform may need to come back to the idea of raising taxes, perhaps with some external prompting: “I guess,” Pethokoukis says, “we will eventually find out if Washington cares about debt without a nudge from the markets.” Ivanka Trump Botches Basic Details of Tax Plan Ivanka Trump lobbied aggressively for an increased child tax credit, so the passage of the GOP tax plan may have been something of a personal [political victory]( for her. But her victory lap was less successful. The first daughter [told]( Fox & Friends that she‘s “really looking forward to doing a lot of traveling in April when people realize the effect that this has. ... The vast majority will be [doing their taxes] on a single postcard." Numerous critics pointed out that she’ll be a little early, since most people won’t be signing their tax forms for 2018 until April 2019, and that the postcard is more of a metaphor than an actual tax-filing document. Trump also [said]( that she thinks the tax bill, combined with the administration’s deregulation efforts, will “ultimately eliminate" the country’s $20 trillion national debt. Watch the video [here](. News - [How the Tax Bill Will Penalize Wage Earners, in One Chart]( – Brookings Institution - [How Tax Cuts Affect Revenue]( – Wall Street Journal - [10 Reasons Democrats Think the Tax Bill Will Be a Political Loser for Trump’s GOP]( – Washington Post - [Blackstone, Carlyle, KKR Dial Up Donations to Key GOP Lawmakers as Tax Bill Protects Carried Interest Loophole]( – Fox Business - [In Tax Overhaul, Trump Tries to Defy the Economic Odds]( – New York Times - [Did the GOP Just Open the Door to a Carbon Tax in 2025?]( – Tax Policy Center - [America’s 20 Largest Companies on the Tax Overhaul]( – Washington Post - [8.8 Million Sign Up for Obamacare, Nearly Matching Last Year]( – The Hill - [Senate GOP Leans Away from Obamacare Repeal, Toward Stabilization]( – Roll Call - [Trump's Mar-A-Lago Tax Deal Veiled from IRS Review]( – Palm Beach Post - [Broken Health-Care Pledge Tests Collins-McConnell Relationship]( – The Hill Views - [You Cannot Be Too Cynical About the Republican Tax Bill]( – Thomas B. Edsall, New York Times - [Tax Bill Demonstrates Our Nation's Upside Down Fiscal Priorities]( – Edward D. Kleinbard, The Hill - [Now It’s Time for Spending Restraint]( – Kevin D. Williamson, National Review - [Trump's Pathetic Bankruptcy Past Shows Through in GOP's Fantasyland Tax Bill]( – Jonathan C. Lipson and Andrea Monroe, USA Today - [Corporate PR Stunts Won’t Save the Working Class]( – Eric Levitz, New York - [Next Task for GOP: Spend Less and Help the Poor]( – Michael R. Strain, Bloomberg View - [Yes, You Really Can Pay for Private School With 529 Plans Now]( – Ron Lieber, New York Times Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](