We have a new number on the deal the House Republicans agreed to. It’s $1.5 trillion over ten years. That does not include an Affordable Housing giveaway.
The $1.5 Trillion Deal
Let’s put a spotlight on the House Way’s and Means Chair, Jason Smith’s Lousy Tax Deal that the Democrats are salivating over.
Some of the 2017 GOP tax cuts are starting to expire, and Republicans want to revive provisions coveted by corporations.
The problem, and it’s a big one, is the price that Ways and Means Chairman Jason Smith is willing to pay to get Senate Democrats to agree to the business breaks. The deal announced Tuesday would expand and further entrench the $2,000 per child tax credit. The overall deal would cover the 2023, 2024 and 2025 tax years and cost roughly $78 billion.
Democrats have wanted to resurrect the turbocharged child credit they passed during the pandemic—$3,600 for children under age six, available to those with no tax liability, delivered in part in monthly checks.
But the estimated $1.5 trillion cost over 10 years is so eye-popping that progressives are happy to let the GOP give them a down payment this year. The main Democratic policy goal is what’s known as refundability. That’s the share of the credit paid to those who don’t owe taxes, and it’s the lever that makes the program another income transfer like cash welfare.
Worse, the deal undermines the incentive to work in return for the credit. The current credit at least requires a small amount of income—a mere $2,500—to begin to claim it. That means it gives low-income Americans an incentive to work more to earn more, which is good for them and their children.
But Mr. Smith’s deal would let parents rely on the prior year’s income to trigger the credit for 2024 and 2025. Work one year—and earn benefits for two. The practical effect is to “cut the work requirement in half,” says Matt Weidinger of the American Enterprise Institute.
The politics of this deal also doesn’t make sense for the GOP, which is no doubt why Chuck Schumer and Democratic pundits have been quick to endorse it. President Biden has been invoking “dire consequences” if Republicans don’t extend the credit.
In return for some tax break crumbs given to Republicans (that will also increase the deficit), Republicans are willing to give Democrats $1.5 trillion in child tax credits.
The GOP Supports a Child Tax Credit Boost and Affordable Housing Expansion
I wrote about this yesterday in The GOP Supports a Child Tax Credit Boost and Affordable Housing Expansion but I was not even even in the ballpark on the total cost.
“The Ds are getting some things that they want to work on,” said Rep. Greg Steube (R., Fla.) “Republicans are getting things they want to work on.”
Yes indeed. It’s more this in return for more of that.
My lead sentence was “Calling all Republicans, calling all Republicans. Hello, is anyone home?“
McCarthy’s House Bill Goes Down in Embarrassing 198-232 Vote
MishTalk September 29, 2023: McCarthy’s House Bill Goes Down in Embarrassing 198-232 Vote
21 GOP lawmakers joined all the Democrats in voting against McCarthy’s bill to avoid a government shutdown.
The McCarthy proposal would have extended government funding through Oct. 31, but at a $1.471 trillion annual rate, down from $1.6 trillion in fiscal 2023. The bill also included strict new border-security measures and the creation of a fiscal commission charged with coming up with ways to balance the budget and improve the country’s fiscal outlook.
The McCarthy proposal would have extended government funding through Oct. 31, but at a $1.471 trillion annual rate, down from $1.6 trillion in fiscal 2023. And it included funds for the border.
We are now up to $1.6+++ trillion under Speaker Mike Johnson and that does not include Ukraine, Israel, or the border.
Nor does it include the full ramifications of child tax credits that now appear to cost an average of $150 billion a year. The estimate yesterday was $78 billion a year for the entire deal.
I am now wondering the true cost of the Affordable Housing Expansion that Smith agreed to.
Yesterday, I said “Don’t be surprised if the ultimate total hits or exceeds $1.8 trillion.”
My new guess today on the price of this deal is $1.8 trillion to $2.0 trillion. I am reluctant to state a firmer number because the cost of the deal keeps rising. And that price does not include Ukraine, Israel, or the Border. Biden wants $113 for Ukraine and Israel and nothing for the border.
McCarthy’s $1.47 billion proposal did include the border.
How Did We Get Here?
For more discussion of how we got to this absurd spot, please see my January 13, 2024 post Mike Johnson Sticks With $1.66 Trillion Budget Deal, Let’s Recap History
Question of the Day: Dear Republicans, can we please (pretty please) go back to the deal McCarthy was fired for proposing?
Bonus question: How the hell is it that Democrats can continually run circles around and run ramrod over the Republicans in every budget negotiation?
“More of This for More of That” no longer suffices as an explanation. Republicans bargain for “Bits of This in Return for Tons of That“.
It was Republicans that birthed this Child Tax Credit monstrosity. It was Republicans that doubled the credit in 2017 from $1,000 to $2,000 per child. It was Sen. Romney who proposed permanently raising it to $4,000 after the pandemic.
This is a right-wing “Born Again” Christian-Capitalist boondoggle. This faction of the GOP is fixated on population growth because Capitalism is at its core, a Ponzi Scheme. Corporate America’s business model, its entire essence, is predicated and dependent on ever increasing aggregate demand for products and services. Capitalism is only able to thrive so long as aggregate demand increases year after year, driving revenue and profits higher and higher. Without population growth aggregate demand stagnants and thus corporate profits stagnant. When population growth is pushed into reverse aggregate demand will fall and the entire Capitalist System will collapse. Domestic and Global population decline is inevitable as a response to increased living standards, secularization, overcrowding, and pollution.
Policies such as the Child Tax Credit and mass immigration will ultimately fail to arrest this decline in population. Even worse, they will accelerate the process of degrading the tax base because they shrink the proportion of the tax base that is compromised of higher income, higher functioning, law abiding people of European stock by promoting reproduction among people with lower intelligence and a higher propensity for lawlessness. This will speed the collapse of the economic system, government, and society.
The republicans are finding out a good chunk of their base are lower income. The lower income voters are starting to notice the republican polices do not benefit them.
We’re all Socialists, just a few steps from the CCP-styled Das Kapital..ism.
If the pols are going to do a Child Tax Credit, I would rather see them change the purpose of it into a Child Education Tax Credit.
Instead of the govt sending an annual tax credit, why not setup an account for each child with an approved Financial firm (Fidelity, Vanguard…etc.). Credit it to that account (each year) and mandate it to invest it 50/50 in a total stock market (or S&P500) etf/fund and the other half in an Intermediate Treasury etf/fund. Then let it accumulate.
Once the child reaches 18, they can use the funds for education purposes only and during the period between the ages of 18-25. Mandate it to pay for tuition and books for college or tech school only during that age range.
After they reach 25 years old, if there’s any unused funds (or the child did not attend a post secondary school) allow the option for the account to pay out the dividend and interest to them with the remaining principal converting into a retirement account (with the option of the now young adult to also reinvest the div/int, if they wish).
Finally, allow the account to begin liquidation when they reach age 62.
In other words, why not make the tax credit a real investment in a child’s future instead of a welfare payment disguised as a tax credit.
“Bonus question: How the hell is it that Democrats can continually run circles around and run ramrod over the Republicans in every budget negotiation?”
Because the budget is just a reflection of who gets the money. The Democrats are trying to put money in people’s pockets, often people who really could use that money. What you are asking Republicans to do is to say to their constituents “yes, you need the money, and yes the democrats want you to have it. But I’m saying no, you can’t have any money, but I do want to cut taxes for the CEO of your company so he can have more.” How well do you think that flies among the tens of millions of poor Republican voters? They’re not voting Republican because they don’t want free money. They’re voting Republican because they don’t want gay people to get married and Mexicans moving here.
your nearly 100% incorrect, but thats ok you are entitled to your opinion, and we all need to hear it
You only have to read the beginning of this bill to realize it’s just a social give away that adds more taxes to hard working citizens creating more low incomes to not work!!
government stupidity at its best! Stop the spending is the only way to turn our economy away.
Dems & republicans are all at fault & spending is out of control!!
“How Did We Get Here?”
Government corruption
I don’t understand why it’s necessary to even have taxes. Revenues and expenditures don’t appear to be corelated. So I’m all for reducing taxes as there is no one that even cares to think about reducing spending.
Mike Johnson kicks the can down until Mar 8. The current gov funding expires on
Jan 19 and Feb 2.
There will be a deal. Based on news today you would think the stock market dropped by 25%.
We are all so broke, it’s not even funny anymore. I give up.
Stop the endless wars and closes 800 + base there would more than enough money. Sadly, the merchants of death will win the fight to continue the madness. I would rather help the poor and working poor than wall street making money from the death and destruction of countries that the neo-conns don’t like.
The problem is that little changes don’t lead to collapae until you reach the straw that broke the camel’s back. We are having a lot of avalanches now as the snow pack is getting more unstable. Nothing will change till the Treasury can’t fund itself in the bond market.
Here is the dirty little secret: every dollar of deficit spending ends up in someone’s bank account. From the bank’s POV, every dollar of deficit spending ends up in the banking system. The banks want to earn safe interest on that money, so they buy the T-Bills and T-Bonds the government is required to sell to pay for the deficit spending. Point is: because of this, the treasury will absolutely always be able to fund itself.
There are already signs of stress in reserve scarcity.
The GOP is just basically Trump now, though. If it’s popular, at least with the right people, Trump is for it, and so is the GOP.
To be fair, though, giving money to families with kids is probably a better use of money than a lot of other stuff the feds do.
“…How the hell is it that Democrats can continually run circles around and run ramrod over the Republicans in every budget negotiation?…”
The answer to this question is quite simple. They (Republicans and Democrats) differ in name only. The bickering between the two groups is all a show.
Democrats play as a team. Because they are forced to. Repubublicans play as individules and get beat everytime.
To quote Margaret Thatcher:
“No! No! No! No! No!”