U.S. Budget Watch is a historical project of the Committee for a Responsible Federal Budget, which provided analysis around the 2008 and 2012 presidential campaigns. This site is not regularly updated.

December 2015

Lawmakers Rush to Cram Pet projects Into Spending Deal Ahead of New Deadline | The New York Times

WASHINGTON — Congressional negotiators are lurching toward a year-end deal that could combine a $1.1 trillion omnibus spending bill with a slate of more than $750 billion in tax breaks for businesses and low-income workers, setting off a frenzied push by lawmakers, lobbyists and interest groups to attach pet provisions to the catchall legislative package.


Republican leaders on Capitol Hill conceded that they will miss a Friday deadline, and the House Appropriations Committee on Wednesday put forward a stopgap measure to prevent a government shutdown and give negotiators an additional five days to reach an agreement.

But while all sides are voicing guarded optimism, discussions are still hung up on some fierce areas of disagreement, particularly over politically charged policy changes, known as “riders,” on topics as diverse as new restrictions on Syrian and Iraqi refugees, environmental regulations and campaign finance rules. Perhaps the most significant of these proposals would lift a more than 40-year-old ban on exports of crude oil.
With a presidential election year approaching, and control of Congress also at stake, the current negotiations represent one of the few opportunities in the near future to pass sweeping legislation.
“Anyone who wants to get anything done, who has already been frustrated by a virtually nonfunctioning Washington, is trying to cram whatever they can into this bill,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, a fiscal watchdog group.
The proposed changes include numerous Republican priorities, such as blocking an environmental regulation that would expand federal authority over domestic waterways and rejecting a proposed Department of Labor conflict-of-interest rule that would impose new restrictions on financial advisers handling retirement funds.
And there are other provisions that would have a more narrow impact, like a tweak to a Depression-era law protecting creditors that critics say would pointedly benefit Apollo Global Management, which owns the Caesars Entertainment casino conglomerate.
That provision is of particular interest to the Senate Democratic leader,Harry Reid of Nevada.
The House has voted twice in recent months for bills that would lift the ban on crude oil exports, a move eagerly sought by lawmakers in oil-producing states.
Supporters of lifting the restriction, like Senator Lisa Murkowski, Republican of Alaska, say that doing so would help the American oil industry, which has struggled amid lower global prices.
Ms. MacGuineas has called the end-of-year legislation a borrowing “bonanza” with both parties prepared to add about $1 trillion to the nation’s debt, partly because Democrats are eager for more spending and also because Republicans in Congress do not insist on offsetting tax cuts with reductions in spending.
“If we were paying for this bill, if we were paying for the tax extenders portion, you wouldn’t be able to put in all these other things,” she said.
The spending measure and the tax package were drawn up separately, and ultimately may reach the House and Senate floors that way as well. But as is often the case in Congress, many of the underlying issues have become intertwined as negotiations come down to the wire, and political and policy imperatives collide.
Among the policy prescriptions sought by Republicans is a provision that would prevent the National Labor Relations Board from enforcing a rule that would make it easier for employees of fast-food restaurants to unionize.

Democrats, in turn, are hoping to extract major concessions in exchange for lifting the oil export ban, including indexing of the child tax credit to inflation, long sought by the House Democratic leader, Representative Nancy Pelosi of California.


There are also bipartisan efforts to use the year-end deal to complete legislation that for various reasons lawmakers could never quite push across the finish line, including a bill that would aid emergency workers now suffering from health ailments related to the work at the site of the Sept. 11, 2001, terrorist attack in New York City.


In recent years, persistent deadlock between Democrats and Republicans over budget policy — as well as the general elimination of so-called earmarks, the individual lawmaker-designated provisions, from appropriations bills — has often left Congress and the White House negotiating over relatively tiny changes in discretionary spending, with far less room for maneuvering by special interests.


The budget accord reached in October between congressional Republicans and the White House, which set overall spending limits for 2016 and 2017 above previously agreed-upon limits, as well as the Republican policy that permits tax cuts without corresponding increases in revenue, has created a rare opportunity. It is all the more tantalizing because Mr. Obama and the new House speaker, Representative Paul D. Ryan of Wisconsin, seem to have a shared interest in completing a deal without a protracted fight.


Paul Winfree, the director of the Heritage Foundation’s Thomas A. Roe Institute for Economic Policy Studies, a conservative think tank, said that some Republican lawmakers were hoping to extract a victory through the policy changes because they were not satisfied with the accord in October that lifted the spending caps.


The White House, which had indicated the president would support a stopgap measure to give negotiators more time, nonetheless accused Republicans of politically motivated foot-dragging.


“They’ve already had weeks and months to negotiate an agreement,” said Josh Earnest, the White House press secretary. “And the only reason that we haven’t come to an agreement is the continued insistence on the part of Republicans to insert ideological riders into the process.”


Ms. MacGuineas said Democrats and Republicans were complicit in a long legacy of failed federal fiscal policy making.


“It all goes toward a bigger picture in that we don’t budget in a sensible way,” she said. “You have these terrible deals and both sides patting themselves on the back and chortling about successful bipartisan efforts.”


Tax-Credit Free-for-All Costly | The Emporia Gazette (KS)

In past presidential elections, candidates hoped to convince voters of their fiscal rectitude. This time, though, fiscal responsibility is out. Tax giveaways are in.

This puts Hillary Clinton in a straitjacket. She has proposed about $1 trillion in new government spending — much of it through the tax code. But unlike the Republican candidates, she doesn’t claim that tax breaks lead to higher growth and thus pay for themselves. So she’s under pressure to show how she’d pay for all the tax credits she is proposing. 

Not only are the Republican candidates offering more generous tax breaks on everything from estates to investment returns. They aren’t even pretending to honor the concept of budget neutrality — that is, they haven’t identified spending reductions or tax increases elsewhere to offset all the tax cuts they are proposing.


The Committee for a Responsible Federal Budget, a nonpartisan think tank, has an infographic showing that the seven GOP candidates with tax-cut plans, using conventional scoring, would add a total of $42 trillion to federal deficits over 10 years.

This election’s sole fiscal hawk, Ohio Governor John Kasich, is finding out the hard way that fiscal probity is out. He’s making little headway with his old-fashioned call for a balanced budget and warnings about his rivals’ “fantasy tax plans.”

The new outlook is also haunting Clinton, who has targeted one interest group after another with tax-relief gifts. The most recent example: up to $1,200 in credits to reimburse family members for the cost of caring for aging parents. (Say thanks, baby boomers.) That followed an offer of up to $2,500 in tax credits for out-of-pocket health-care costs. (This one’s for you, millennials.)

And those followed her proposals for making college more affordable, including making permanent a generous tax credit for college tuition and other expenses that began under the 2009 stimulus law. The package’s price tag: $350 billion over 10 years.

Clinton also would provide tax credits to help working parents pay for child care. Low-income homeowners who install solar panels would be eligible for a break, as would investors in low-income urban areas.

For companies, she would provide $1,500 tax credits for each apprentice hired, and an expansion of an existing job credit if businesses hire ex-felons and other marginalized people. She would reward companies with profit-sharing plans with a 15 percent tax credit on the value of bonuses paid out.

The list goes on. It’s so lengthy that Clinton opens herself to charges of mucking up an already over-complicated tax system. Besides, the government already offers a wide array of means-tested grants and loans for college; why is it necessary to use back-door spending to subsidize higher education even more?

Clinton was not going to forget Big Labor. She offers a tax credit that encourages infrastructure spending, which would provide jobs to union workers. She salami-slices the whole Democratic base — boomers with aging parents; millennials with college loans; homeowners with costly mortgages; and minorities living in under-served urban areas. Each would get a generous credit.

She vows to pay for it all, but so far hasn’t said exactly how. ... She needs to find about $500 billion in savings to pay for the rest of her free stuff. That’s the price of claiming to be fiscally responsible. It’s also the price of playing interest-group politics.

U.S. Lawmakers Seek $700 billion Tax-Cut Deal | Financial Times (Paywall)

Corporate America is urging lawmakers to seal a potential deal to save $700bn in taxes for businesses and individuals in a rush of end-of-year dealmaking on Capitol Hill.

US businesses want Congress to make permanent dozens of temporary tax breaks that have been renewed multiple times but expired at the end of 2014, creating unwanted costs and uncertainty.
In negotiations over recent days Democrats have insisted the corporate breaks be matched by tax benefits for the working poor and the middle class, a point on which both parties broadly agree, aides said.
But the talks were hanging in the balance on Tuesday as the deal’s price tag caused some unease and disagreements blew up linked to President Barack Obama’s healthcare reforms, still a toxic subject for Republicans.
A deal over the 50-plus measures known as “tax extenders” would clear the way for Congress to focus on broader tax reform, which businesses are eager to see and is most likely in 2017 after the next presidential election.
Negotiations on the extenders are separate from talks over a spending bill to dole out budget funds, which has a deadline of this Friday.
Caroline Harris, executive director of tax policy at the US Chamber of Commerce, the biggest business lobby, said the tax measures would bring “predictability and certainty” to the law.
“Congress must act now to extend these vital provisions, which are essential to ensuring companies can compete globally [and] have appropriate cost recovery times.”
Executives and their lobbyists have fanned out across Capitol Hill in recent weeks to make their case to lawmakers on breaks such as a tax credit for research and development, which could cut $110bn off tax bills, according to the Committee for a Responsible Federal Budget.
Another popular provision with a big price tag would let small business owners claim a tax deduction for the expense of office equipment, machinery and other items as soon as they are purchased, delivering a tax cut of around $70bn.
Other breaks affect the renewable energy industry, including a production tax credit used by wind power developers and a solar investment tax credit.
Democrats and the Obama administration broadly support the business measures. But they want to use the tax package to renew family-focused breaks such as a child tax credit for low-income parents and an “earned income tax credit” to let poor workers recover some income.
Republicans have sought to exclude undocumented immigrants from receiving those benefits.
Ron Wyden, the top Democrat on tax policy in the Senate, said: “Right now there are many moving pieces in play. At the end of the day both sides want a multiyear bill that provides economic relief to families and greater predictability for businesses.”
A spokeswoman for Orrin Hatch, who leads tax writing for Senate Republicans, said: “Negotiations continue and no final decisions have been made on how Congress will move forward.”
While businesses would like their tax breaks to become permanent, House Republicans introduced back-up legislation on Tuesday night that would cover two years, bringing the extenders into force for 2016 and retroactively for 2015.
The healthcare provisions that caused the latest hiccup in talks include a medical device tax that Republicans want to eliminate and a “Cadillac tax” on the most expensive health insurance policies that some Democrats — but not the White House — want to reform.
Congress has not found a way to pay for the potential tax cuts so they would increase the budget deficit, a cause of concern for some lawmakers.
Marc Goldwein, vice-president of the Committee for a Responsible Federal Budget, a bipartisan group, estimated that a deal could deliver a tax cut worth $500bn-$800bn, with a likely reduction of $700bn based on current negotiations.
“A lot of members [of Congress] are willing to add $700bn [to the deficit] for the right deal, but if it’s the wrong deal the size of that number is going to come into play,” he said.
He said there was a “decent chance” that a two-year deal would be the best Congress could achieve.
“I don’t think any one division is too big to bridge. But they need to make a lot of different people happy in a lot of different areas, and everything they do is going to make someone unhappy.”

Why The Government Probably Isn't Going to Shut Down This Weekend (We Think) | The Washington Post

When we last left you in this series, congressional budget experts told The Fix that the government looked more likely than not to shut down over partisan bickering at midnight Oct. 1.

But Speaker John Boehner (R-Ohio) changed all that when he suddenly announced his resignation, taking the wind out of the sails of conservatives who threatened to oust him if he didn't agree with their demands.

On his way out the door, Boehner worked mostly with congressional Democrats and the White House to pass a two-year budget deal that also raised the debt ceiling into 2017. Then Congress elected a new speaker, Rep. Paul D. Ryan (R-Wis.), and gave itself until midnight Friday to put actual dollars to that budget framework.

Attempting to pass that spending bill this week is Congress's latest challenge. And, so, we're arguably right back where we started in September: on shutdown watch.

The political dynamics that led experts to predict a shutdown this fall haven't substantially changed. Ryan faces the same pressures from conservative lawmakers and Democrats as Boehner did. Lawmakers on both sides of the aisle would love to use the spending bill to send political messages, including: No funding of the agency that handles refugees until the Obama administration can confirm that its process for vetting Syrian refugees is safe. Limit the Environmental Protection Agency's efforts to control greenhouse gas emissions. Whether to lift the ban on U.S. oil exports.

Even  cutting off funds for Planned Parenthood, the women's health nonprofit that was the subject of antiabortion advocates' ire this summer, could be in the mix.

All of that said, this time around, our congressional budget experts think the dynamics are just different enough that these lawmakers' demands are unlikely to stop the spending bill process. At the same time, no one knows for certain what will happen.

Even so, our experts are betting that the government is more likely than not to stay open as Friday turns to Saturday. Here's why:

(Ed. note: The Fix will be on shutdown watch until some kind of deal is passed. If any of our experts' predictions change, we'll update this post, so bookmark it!)

Congress is first passing a short-term spending deal

Normally, this would be a bad sign. Congress practically lives on short-term spending bills, which carry over last year's budget to next year's. It's how they got to Friday's deadline, and it's what Ryan said Congress will need to pass by Friday instead of a two-year deal.

But this time, falling back again on a short-term bill could actually be a good sign, says Molly Reynolds, a governance expert at the Brookings Institution.

She thinks it means lawmakers are actually close to a long-term deal and just need a little more time.

In asking for more time-- Dec. 16 is the latest deadline -- they are signaling that a deal that has enough support to pass Congress and get President Obama's signature is imminent. That also has the potential effect of tamping down on some lawmakers' efforts to champion issues that could cause a shutdown: Why pick up a fight you know you're going to lose?

"I take this as a sign they're getting closer," Reynolds said. "There just might be some hang-ups."

Worst case in this scenario, says budget expert Stan Collender: Lawmakers don't have a deal by Friday but think they can get it done over the weekend, so they decide not to pass a short-term spending bill and effectively create a shutdown Saturday and Sunday. But even then, "the only people who would notice are those going to a national park," Collender says.

This spending bill debate is between Republicans and Democrats and not an intra-GOP fight

The sticking points that are holding up negotiators this week are unlikely to resemble some of the intraparty fights that have caused or threatened to cause a government shutdown in the past.

That's because some issues — such as whether to raise the debt ceiling or how to deal with arbitrary spending cuts that grew out of a 2011 "fiscal cliff" — are already settled in the budget blueprint Congress passed in late October.

Theoretically speaking* (see caveat below), all that's left for Congress to do is allocate dollars to the mission statements laid out in the budget.

There's a strong chance that conservatives won't be happy with what negotiators come up with: The budget on which the spending bill will be modeled was passed in the House with 187 Democrats and just 79 Republicans.

But party leaders know this, and they're working to ensure that what they come up with can get enough support from Democrats to carry the bill; in order words, they're trying to strike a good, old-fashioned bipartisan compromise.

If that happens, those lawmakers unhappy with the spending bill don't have a ton of tools at their disposal to stop it — except to start the whole process over again by trying to oust another speaker.

Our experts don't think conservatives are up to that this time around; they say there's enough goodwill among Republicans for their new speaker to let him try to pass a spending bill, even if it is supported mostly by Democrats.

Republican leaders really don't want a shutdown

Two budget experts The Fix spoke to said 2016 is weighing heavily on congressional Republicans' minds. The presidential election is just 11 months away, and the party's dream of being able to take back the White House after eight long years in the dark is within sight.

Right now, the issues being debated on the national stage — national security and terrorism — tend to favor Republicans. Why mess that up with a scene-stealing government shutdown under Republicans' watch?

"Republicans know they will own a shutdown," said former top Senate Democratic aide Jim Manley, "and that doing so will divert attention from Obama and his failed ISIS policies – their words not mine."

"Republicans have finally learned something," said Steve Bell, a former top Senate Republican aide and the director of economic policy at the Bipartisan Policy Center. "Shutting down the government is not good for their chances."

Ryan and Senate Majority Leader Mitch McConnell (R-Ky.) are hoping the rest of their party see the long game and get in line to pass this spending bill. Or at least not try to stop it.

But …

As always, we end any attempts to predict what's going to happen in Congress with a giant caveat.

And that is that anything could happen — any issue could suddenly become the issue and rally enough lawmakers to stop the entire carefully negotiated process in its tracks. (Few predicted refugee resettlement — once a nonpartisan budget item — would be as big an issue as it is today, for example.)

"The differences – and there are many – are about riders not money," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. (Riders is D.C. speak for political issues like Planned Parenthood or Syrian refugees; policy proposals lawmakers want to add onto the spending bill to limit or dictate spending on these particular issues.)

Congressional leaders might well be close to producing an agreement that enough lawmakers can live with to keep the government open.

But they can't control what forces will suddenly shift the political debate between now and then. And that's why our experts say a government shutdown this week is unlikely — but can't be ruled out entirely.

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