FY21 Budget
House Budget, FY21 Budget, February 12, 2020
As we all know, the appropriations process for the next fiscal year takes place within the context of the Bipartisan Budget Act of 2019. In an election year, staying within the current parameters is the best course. Early passage makes transition easier for the next administration and Senate, regardless of electoral outcomes. Even if the President is reelected, staff turnover is to be expected in the Administration and the Committee. If changes are to be made due to changes in party, enactment before the election can always be supplemented with new legislation.
Our analysis on the level of spending has not changed in the past week. To repeat the BCA marks were devised to avoid a self-inflicted debt limit crisis and to conform to baseline requirements to fund making the tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 permanent for all but the richest 2% of households. There was no appetite for making detailed tax and spending fixes that would raise revenue from wealthier taxpayers. A quirk in baseline calculations allowed the prior tax cuts to expire and be reinstated for the bottom 98% under the American Taxpayer Relief Act of 2012. In 2017, the Tax Cut and Jobs Act was passed with no concern for long term balance, which was reinforced by the Balanced Budget Act of 2018. The TCJA expires, in part, in 2025. BBA 2018 expires at the end of FY 2019.
In the long-term, as we have stated recently as well, debt will be a problem – but not within the next few years – as neither Europe nor China will enact the same kind of consolidated income tax, debt and monetary reserve system that allows us to be the world’s currency securitization provider. See Attachment One for our latest on the Debt.
Debt reduction must not be an excuse to cut entitlements. As we state in our debt volume, Squaring (and Settling) Accounts: Who Really Owns the National Debt? Who Owes It? - December 2019, the debt assets owed to the bottom 40% are sacrosanct, as they paid for it with regressive payroll taxes while they were working or by having to shift from the Civil Service Retirement System to the Federal Employee Retirement System which required savings rather than a defined benefit. Forty years ago, the decision was made to advance fund the retirement of the baby boomers, rather than immediately begin subsidies from the general fund. Doing so would have required repealing the tax cuts on the rich enacted by President Reagan, the Senate and just enough conservative Democrats in the House to do damage. They also gave us the ill-advised 1986 tax reform.
Now that the wealthy have to pay what they owe to the trust fund (or rather, the children of the wealthy of the 80s), people are talking about means testing Social Security and were talking about making it attractive to upper classes by investing it. The latter non-sense died in 2008. The former would again make asset holders fix the debt liability of the top 10%. It would also rob the bottom two quintiles of their most effective voice – higher income taxpayers who do receive benefits. As long as they get them, the program is safe.
While we do not expect comprehensive tax reform in the last session of this Congress, we remind you it is inevitable, with our proposals detail again in Attachment One.
The answer cannot be shifting liability down or claiming that we owe debt on a per capita basis. It is raising taxes enough so that the debt is reduced and incomes for most households are increased.
To sell a tax increase on high incomes (or wealth, for that matter), we must make the wealthy want to pay more. They won’t do so to fund Medicare for All, the Green New Deal or to decrease abortion by increasing the Child Tax Credit. They will do so to get their children and grandchildren out of hock
We are not without solutions. Our tax reform plans, which can be found in Attachment Two, provide more money to families with children, while a higher minimum wage for both work and education from ESL and adult remedial education to technical certification and junior college through our Subtraction Value Added Tax proposal.
As we all know, the appropriations process for the next fiscal year takes place within the context of the Bipartisan Budget Act of 2019. In an election year, staying within the current parameters is the best course. Early passage makes transition easier for the next administration and Senate, regardless of electoral outcomes. Even if the President is reelected, staff turnover is to be expected in the Administration and the Committee. If changes are to be made due to changes in party, enactment before the election can always be supplemented with new legislation.
Our analysis on the level of spending has not changed in the past week. To repeat the BCA marks were devised to avoid a self-inflicted debt limit crisis and to conform to baseline requirements to fund making the tax cuts in the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003 permanent for all but the richest 2% of households. There was no appetite for making detailed tax and spending fixes that would raise revenue from wealthier taxpayers. A quirk in baseline calculations allowed the prior tax cuts to expire and be reinstated for the bottom 98% under the American Taxpayer Relief Act of 2012. In 2017, the Tax Cut and Jobs Act was passed with no concern for long term balance, which was reinforced by the Balanced Budget Act of 2018. The TCJA expires, in part, in 2025. BBA 2018 expires at the end of FY 2019.
In the long-term, as we have stated recently as well, debt will be a problem – but not within the next few years – as neither Europe nor China will enact the same kind of consolidated income tax, debt and monetary reserve system that allows us to be the world’s currency securitization provider. See Attachment One for our latest on the Debt.
Debt reduction must not be an excuse to cut entitlements. As we state in our debt volume, Squaring (and Settling) Accounts: Who Really Owns the National Debt? Who Owes It? - December 2019, the debt assets owed to the bottom 40% are sacrosanct, as they paid for it with regressive payroll taxes while they were working or by having to shift from the Civil Service Retirement System to the Federal Employee Retirement System which required savings rather than a defined benefit. Forty years ago, the decision was made to advance fund the retirement of the baby boomers, rather than immediately begin subsidies from the general fund. Doing so would have required repealing the tax cuts on the rich enacted by President Reagan, the Senate and just enough conservative Democrats in the House to do damage. They also gave us the ill-advised 1986 tax reform.
Now that the wealthy have to pay what they owe to the trust fund (or rather, the children of the wealthy of the 80s), people are talking about means testing Social Security and were talking about making it attractive to upper classes by investing it. The latter non-sense died in 2008. The former would again make asset holders fix the debt liability of the top 10%. It would also rob the bottom two quintiles of their most effective voice – higher income taxpayers who do receive benefits. As long as they get them, the program is safe.
While we do not expect comprehensive tax reform in the last session of this Congress, we remind you it is inevitable, with our proposals detail again in Attachment One.
The answer cannot be shifting liability down or claiming that we owe debt on a per capita basis. It is raising taxes enough so that the debt is reduced and incomes for most households are increased.
To sell a tax increase on high incomes (or wealth, for that matter), we must make the wealthy want to pay more. They won’t do so to fund Medicare for All, the Green New Deal or to decrease abortion by increasing the Child Tax Credit. They will do so to get their children and grandchildren out of hock
We are not without solutions. Our tax reform plans, which can be found in Attachment Two, provide more money to families with children, while a higher minimum wage for both work and education from ESL and adult remedial education to technical certification and junior college through our Subtraction Value Added Tax proposal.
Attachment One – Excerpts from Squaring (and Settling) Accounts: Who Really Owns the National Debt? Who Owes It? - December 2019
Attachment Two – Tax Reform, Center for Fiscal Equity, September 13, 2019
posted by Michael Bindner at 10:00 AM
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