Budget Deal Raises Spending, and the Deficit, Through Tax Breaks

22 Dec 2015 | Author: | No comments yet »

Congress Rolls Out Massive Government Funding Bill, Tax Break Extensions.

House Speaker Paul Ryan meets with reporters on Capitol Hill in Washington, Wednesday, Dec. 16, 2015, as lawmakers work to complete end-of-the-year business and pass a comprehensive spending bill.Congressional leaders agreed to a budget-busting set of tax cuts late Tuesday as part of a year-end, clear-the-decks deal that marks a major reversal from the last four years’ focus on deficits and streamlining the tax code.

WASHINGTON (AP) — From finance companies and manufacturers to teachers and the working poor, there is a tax break for almost everyone in the massive package unveiled by congressional leaders. While the total cost of the package had not been publicly estimated by the Congressional Budget Office, it was expected to total in the hundreds of billions of dollars over the next decade — undoing in one swoop many of the deficit gains the GOP had won under then-Speaker John A. That confusion ends now, and our economy will be stronger for it,” House Ways and Means Committee Chairman Kevin Brady said in a statement upon the bill’s release. “By delivering permanent tax relief, we’re making it easier for Americans to keep more of their own money, find new jobs, and increase their wages.” After weeks of negotiations, the $1.1 trillion, 2,009 page omnibus package that would keep the government funded until September 2016, was rolled out just after 1:30 a.m. Instead, the 233-page document moves away from deficit-cutting and embraces dozens of special tax breaks that presidential candidates in both parties had said they wanted to eliminate. The deal explicitly exempts itself from budget rules that normally require all new spending or tax cuts to be offset by tax increases or spending cuts elsewhere in the budget.

Congressional leaders are preparing to push a Christmas compromise on tax cuts and spending through the House and Senate by week’s end after Republicans and Democrats reached agreement on a legislative package extending dozens of tax breaks for businesses and families and financing 2016 government operations. (AP Photo/J. Both chambers are expected to pass a second short-term measure to fund the government until Dec. 22 as the current short-term measure expires at midnight. Scott Applewhite) “In my view it is practically an immorality in terms of how it damages the future,” House Minority Leader Nancy Pelosi, D-Calif., said about the tax bill.

Ron Wyden of Oregon, the ranking Democrat on the Finance Committee. “Millions of working families with children will not find themselves suddenly taxed into poverty. Senate passage of both measures, which the chamber’s top Democrat said he would support, would be Congress’ coda to a tumultuous 2015 that often saw Republicans at each other’s throats and the forced retirement of former Speaker John Boehner, R-Ohio.

The accord, which includes victories for everyone from oil companies and working-class families to 9/11 emergency workers and biomedical researchers, seems assured of getting President Barack Obama’s signature. White House spokeswoman Jen Friedman said the legislation “bolsters our security, grows our economy and reflects our values.” With temporary financing of federal agencies expiring Wednesday at midnight, the House by voice vote approved a stop-gap bill preventing a government shutdown through next Tuesday, giving lawmakers time to finish the long-term spending legislation. Also included is a permanent extension of the research and development tax credit, created by Congress in the early 1980s as a temporary boost to the slumping economy.

GOP lawmakers mocked it as a relic that ignored today’s burgeoning U.S. supplies enabled by new drilling methods, while critics called the move an environmentally damaging windfall for big oil companies. And the agreement unravels one of the key tax increases in Obamacare, in a move budget watchdogs had long warned against, saying it would make the massive health overhaul a bad deal for taxpayers.

They also blocked GOP proposals to thwart Obama administration clean air and water regulations, but many still found the lifting of the oil export ban a bitter pill. Obama had fought for the tax, saying it was an important incentive to try to control exploding costs in the health care market, but Democrats in Congress, prodded by their union allies, linked arms with the GOP to impose a two-year delay on the Cadillac Tax, which was to go into effect in 2016. Taxes imposed to help pay for Obama’s 2010 health care overhaul, which Republicans have long sought to unravel, were curbed — to the applause of the GOP and many Democrats. These included a tax on high-cost health insurance whose scheduled 2018 start was delayed two years, a win for unions, and a suspension in 2016 and 2017 of the 2.3 percent levy on many medical devices. Language limiting reimbursements to insurance companies losing money on the federal and state health insurance exchanges was retained, despite Democratic efforts to erase it.

Many expired tax breaks were renewed temporarily, including reductions for some companies on Indian reservations, race horses and some film and TV productions. Omitted were two major GOP goals: Language dismantling much of Obama’s health care law and blocking federal money for Planned Parenthood, which would be certain to draw vetoes. That included one making it much harder for Syrian and Iraqi refugees to enter the U.S., which the House approved after last month’s terror attack in Paris. They also said they prevented increases in most Internal Revenue Service operations, though that agency’s overall $11.2 billion budget was $1.1 billion more than the GOP-run House approved earlier this year.

AP Congressional Correspondent Erica Werner and reporters Andrew Taylor, Mary Clare Jalonick, Matthew Daly and Josh Lederman contributed to this report.

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