The House Ways and Means Committee is working on a tax extenders bill. One complication is that many of these provisions enjoy little support, which is why they were left out of tax reform in the first place. But some have substantial merit.
The bigger complication is the committee’s desire to offset, or pay for, the $2 billion in foregone revenues over the next 10 years from extending these tax provisions. Unfortunately, many on the committee see this as an opportunity to make a political statement, like raising the corporate tax rate or the estate tax, thereby dooming the bill as written.
At the same time, Committee Chairman Richard Neal (D-MA) is working with his membership to expand the Earned Income Tax Credit (EITC). The EITC is a vital component of the social safety net, substantially increasing the incomes of the nation’s poorest families. The hang-up? Finding a suitable revenue offset.
Meanwhile, elsewhere in Washington congressional leadership and the White House are working toward a budget deal. The White House has offered up a one-year continuing resolution, but many in Congress want a two-year deal and a significant increase in defense and non-defense spending. How much of an increase a deal might embrace is uncertain, but it will surely be at least $25 billion for 2020. So that translates to maybe $300 billion over 10 years; more if you include added net interest expense.
So, on one hand we have a committee deliberating tax extenders and anti-poverty tax credits while worried about the deficit effects of a few billion dollars. And on the other hand we have bi-partisan negotiations seeking to expand the deficit by far, far more. Offsets? You must be joking.
Does anyone else see a problem with this picture? If you want an example of how the budget process has totally collapsed in Washington, you couldn’t find a better one.
About the authors
Former Senior Vice President, Economic Policy Division, and Former Chief Economist
Dr. J.D. Foster is the former senior vice president, Economic Policy Division, and former chief economist at the U.S. Chamber of Commerce. He explores and explains developments in the U.S. and global economies.