via Mike Shedlock:
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“.