Andrew Taylor

Coronavirus relief pushing US deficits to staggering heights

WASHINGTON (AP) — Spend what it takes, Washington said as it confronted the coronavirus. Well over $2 trillion later, it’s unclear where that spending will end. One of the lasting legacies of the coronavirus pandemic will be staggering debts and deficits on the U.S. balance sheet, with shortfalls hitting levels that would have been unthinkable just a few decades ago. It’s a fiscal clamp that is likely to persist for a generation, or even into perpetuity, with debt levels having passed the point of easy return in a capital where lawmakers are increasingly incapable, or unwilling, to constrain them. The latest, and dire, projection from the Congressional Budget Office, released April 24, states the U.S. deficits will mushroom to $3.7 trillion in 2020, fueled by the four coronavirus relief bills signed into law by President Donald Trump. A fifth bill is already in the works, and will be “expensive,” according to House Speaker Nancy Pelosi, D-Calif. The deficit for 2021 is estimated to tally $2.1 trillion, double previous CBO estimates. The report predicts a devastating hit to the economy this quarter at an annualized rate of decline of 40 percent — probably the sharpest economic shock ever — accompanied by a 15 percent unemployment rate this spring and summer. For the entire year, the economy is predicted to shrink by 5.6 percent. CBO Director Phillip Swagel cautioned that there is “enormous uncertainty” to the projections, given the unprecedented nature of the crisis, but it’s plain the economic shock is unlike anything seen since the Great Depression. “Challenges in the economy and the labor market are expected to persist for some time,” Swagel wrote in a blog post. He said the economy is likely to begin rebounding in the third quarter, but the jobless rate will remain about 10 percent by the end of 2021. On the government front, coronavirus-related figures point to red ink unparalleled since World War II. Economists generally say the most significant measure of debt and deficits is to compare it against the size of the economy, and by that measure the debt is soon to rival the record. CBO says publicly held debt will reach 101 percent of gross domestic product by the end of this year, just below the post-war high. The deficit was entrenched long before the virus, with federal revenues shrinking to well below historic averages and the spending side of the ledger rising thanks to record Pentagon expenditures and the addition of baby boomers to Medicare and Social Security. Even Washington’s few remaining spending hawks say red ink should not be a focus for now as the government faces unemployment levels not seen since the Great Depression and shutdown orders lasting well into next month or beyond. “Right now, I think the wise move for Congress is to keep the economy afloat regardless of what it costs,” said Brian Riedl, an economic and budgetary policy analyst at the free market Manhattan Institute think tank. “That being said, the budgetary cost is enormous, cannot be ignored, and makes it even more important that lawmakers begin thinking about how to fix the federal budget after this is over.” But when policymakers inevitably are forced to take on deficits, virtually none of them will have any experience in doing so. The era of successful action ended long ago, with a hard-won 1997 law that capped a decade’s worth of politically costly but ultimately effective reduction measures. In the interim, a divisive brand of politics has taken hold. No one has even seriously tried tackling the debt since a failed effort by former GOP Speaker John Boehner of Ohio and President Barack Obama almost a decade ago. Republicans are beginning to warn of the coronavirus costs now — GOP Sen. Ben Sasse on Friday called Washington’s spending habit “suicidal” — but the party passed deficit-financed tax cuts when controlling all of government in 2001 and 2017. Those twin tax bills mean that a steadily more liberal Democratic Party won’t endorse the kinds of deficit-cutting steps they endorsed in the 1990s. There’s also no agreement on what levels of debt and deficits are sustainable, and the number of deficit doves has swelled over the past decade. Those skeptical of the fiscal warnings note that the government has run large deficits for well over a decade without the predicted increase in interest rates, economic stagnation or a European-style fiscal crisis. “There’s zero reason to be concerned about the short-term macroeconomic impact of the deficit,” said Harvard University economist Jason Furman, a former economic policy adviser to Obama. “Interest rates are very low. The Fed has a lot of tools to ensure that they stay very low, and the bigger short-run macroeconomic concern is an insufficient response.” The CBO has long said that lawmakers eventually will be forced to tackle the government’s chronic financial woes, if for no other reason than the looming insolvency of Social Security and Medicare. When Social Security runs out of reserves in the next decade, the system will be able to pay only 79 percent of benefits. The problem is landing in the lap of whoever is elected in November in a race that’s been transformed by the crisis. The presumptive Democratic nominee, former Vice President Joe Biden, supported numerous deficit-reduction bills over his long career but has moved significantly to the left in hopes of uniting party progressives behind him.

Deal struck to approve new North American trade deal

WASHINGTON (AP) — House Democrats and the White House announced a deal Dec. 10 on a modified North American trade pact, handing President Donald Trump a major Capitol Hill win on the same day that impeachment charges were announced against him. Both sides hailed the deal as a win for American workers. They said the revamped U.S.-Mexico-Canada Agreement was a significant improvement over the original North American Free Trade Agreement, with Democrats crowing about winning stronger provisions on enforcing the agreement while Republicans said it will help keep the economy humming along. “There is no question of course that this trade agreement is much better than NAFTA,” House Speaker Nancy Pelosi, D-Calif., said in announcing the agreement, saying the pact is “infinitely better than what was initially proposed by the administration.” Trump said the revamped trade pact will “be great” for the United States. “It will be the best and most important trade deal ever made by the USA. Good for everybody - Farmers, Manufacturers, Energy, Unions - tremendous support. Importantly, we will finally end our Country’s worst Trade Deal, NAFTA!” the president said in a tweet. The deal announcement came on the same morning that Democrats outlined impeachment charges against Trump. The trade pact is Trump’s top Capitol Hill priority along with funding for his long-sought border fence. Trump said it was no coincidence that Democrats announced they had come to an agreement shortly after laying out the two impeachment charges they will seek against him. “They were very embarrassed by (impeachment), and that’s why they brought up USMCA an hour after because they figure it will muffle it a little bit,” Trump told reporters at the White House before departing for a campaign rally in Pennsylvania. In Mexico City, Trump’s son-in-law and senior adviser, Jared Kushner, U.S. Trade Representative Robert Lighthizer and Canadian Deputy Prime Minister Chrystia Freeland joined Mexican officials to sign the updated version of the United States-Mexico-Canada trade agreement, or USMCA, at a ceremony in Mexico City’s centuries-old National Palace. Mexican Foreign Minister Marcelo Ebrard congratulated the negotiators for reaching a second set of agreements to answer U.S. concerns about labor rights in Mexico, and regional content. “Mission accomplished!” Ebrard told the gathered officials. Lighthizer praised the joint work of the Trump administration, Democrats, business and labor leaders to reach an agreement, calling it “nothing short of a miracle that we have all come together.” “This is a win-win-win agreement which will provide stability for working people in all three countries for years to come,” Freeland said. “That is no small thing.” A U.S. House vote is likely before Congress adjourns for the year and the Senate is likely to vote in January or February. Senate Majority Leader Mitch McConnell said the vote on the trade deal will likely occur after an expected impeachment trial in the Senate. Pelosi was the key congressional force behind the deal, which updates the 25-year-old NAFTA accord that many Democrats — especially from manufacturing areas hit hard by trade-related job losses — have long lambasted. She and Ways and Means Committee Committee Chairman Richard Neal, D-Mass., forged a positive working relationship with Lighthizer, whom they credited with working in good faith. “Thanks to President Trump’s leadership, we have reached an historic agreement on the USMCA. After working with Republicans, Democrats, and many other stakeholders for the past two years we have created a deal that will benefit American workers, farmers, and ranchers for years to come,” Lighthizer said. “This will be the model for American trade deals going forward.” NAFTA eliminated most tariffs and other trade barriers involving the United States, Mexico and Canada. Critics, including Trump, labor unions and many Democratic lawmakers, branded the pact a job killer for the United States because it encouraged factories to move south of the border, capitalize on low-wage Mexican workers and ship products back to the U.S. duty free. Weeks of back-and-forth, closely monitored by Democratic labor allies such as the AFL-CIO, have brought the two sides together. Pelosi is a longtime free trade advocate and supported the original NAFTA in 1994. Trump has accused Pelosi of being incapable of passing the agreement because she is too wrapped up in impeachment. The original NAFTA badly divided Democrats but the new pact is more protectionist and labor-friendly, and Pelosi is confident it won’t divide the party, though some liberal activists took to social media to carp at the agreement. “There is no denying that the trade rules in America will now be fairer because of our hard work and perseverance. Working people have created a new standard for future trade negotiations,”said AFL-CIO President Richard Trumka. “President Trump may have opened this deal. But working people closed it.” Business groups like the U.S. Chamber of Commerce also chimed in to support the long-delayed agreement. “This agreement has been the result of painstaking bipartisan negotiations over the past year, and would not have been possible if not for the willingness of President Trump to work patiently with Democrats to get something done that he knew was in the best interests of American workers, farmers and manufacturers,” said Sen. Rob Portman, R-Ohio, a former U.S. trade representative. Republicans leaders and lawmakers have agitated for months for the accord but Pelosi has painstakingly worked to bring labor on board. Democrats see the pact as significantly better than NAFTA and Trumka’s endorsement is likely to add to a strong vote by Democrats that have proven skeptical of trade agreements. “I think the vote’s going to be pretty good,” said No. 2 House Democrat Steny Hoyer, D-Md., a veteran party whip. “There’s a general agreement — not total agreement, it’s not unanimity — that USMCA is better. It’s an improvement. And to the extent that Trumka and labor comes out and says that this is an improvement, I think that that will be unifying.” The pact contains provisions designed to nudge manufacturing back to the United States. For example, it requires that 40 percent to 45 percent of cars eventually be made in countries that pay autoworkers at least $16 an hour — that is, in the United States and Canada and not in Mexico. The trade pact picked up some momentum after Mexico in April passed a labor-law overhaul required by USMCA. The reforms are meant to make it easier for Mexican workers to form independent unions and bargain for better pay and working conditions, narrowing the gap with the United States. Democrats succeeded in tossing overboard a 10-year protection for manufacturers of new drugs, including so-called biologics, that had won reprieve from lower-cost competition in the original accord. But Pelosi lost out in a bid to repeal so-called Section 230, a provision in a 1996 law that gives social media companies like Facebook broad immunity from lawsuits over the content they publish on their platforms. Conservative Pennsylvania GOP Sen. Pat Toomey offered a rare GOP voice against the accord, which he said veered to the left and “undermines the free flow of capital” from the U.S. to its trading partners. “This is basically NAFTA with a few modernizations, and some restrictions on trade and an expiration date. If people think that’s a huge improvement than I guess they’ll be happy with it,” Toomey told reporters. “If people think free trade is important, they’ll presumably see it as the step backward that I see it as.’’ Toomey said Democrats had outmanuevered the administration, an assessment that Pelosi shared. “We ate their lunch,” Pelosi told her Democratic colleagues in a closed-door meeting, according to an aide in the room. Vice President Mike Pence, however, released a statement praising Trump’s leadership and claiming Democrats “have finally acquiesced” in allowing a vote on the trade pact. “From my perspective it’s not as good as I had hoped,” McConnell said, while No. 2 Senate Republican John Thune of South Dakota offered a mixed assessment as well, saying the changes agreed to by Pelosi and Lighthizer were “not favorable.” Associated Press writers Matthew Daly and Aamer Madhani in Washington and Mark Stevenson in Mexico City contributed to this story.

Pact reached to avert government shutdown through Dec. 20

WASHINGTON (AP) — A top House lawmaker announced Nov. 12 that Congress will pass a government-wide temporary spending bill to keep the government running through Dec. 20, forestalling a government shutdown as the House turns its focus to impeachment hearings. Appropriations Committee Chairwoman Nita Lowey, D-N.Y., made the announcement after meeting with Senate counterpart Richard Shelby, R-Ala., in hopes of kick-starting long-delayed efforts to find agreement on $1.4 trillion worth of agency spending bills. A fight over President Donald Trump’s demands for up to $8 billion in new funding for his U.S.-Mexico border fence project is largely responsible for an impasse on the huge spending package, which would implement the details of this summer’s hard-won budget accord. The politically explosive impeachment hearing and the possibility of impeachment and a trial aren’t making the jobs of dealmakers like Lowey any easier. It’s yet another layer of complications for senior lawmakers pressing not just for an agreement on agency budgets; it’s also complicating action on a long-sought rewrite of the North American trade rules. The coming weeks could still be the last, best opportunity for lawmakers to wrap up their work on the budget and the trade deal, even as stakeholders admit the timetable could easily slip amid foot-dragging and partisan flare-ups. As the House returns from a quick break, the sole piece of must-do business before Thanksgiving is to pass a governmentwide stopgap spending bill to avert the second government shutdown within a year. The top leaders of the House and Senate Appropriations committees met Nov. 12 afternoon to try to make progress toward a year-end deal on a massive appropriations package. Greeting reporters after a meeting with Shelby, Lowey sought to dispel worries of a shutdown when current funding expires Nov. 21. Shelby and Lowey promised a renewed push toward completing their unfinished work in coming weeks but offered no specifics. “We had a very productive conversation,” Lowey said. “It’s our responsibility as the chairs of the committees to get our work done and we intend to get our work done.” Most notably, a recurring fight over Trump’s U.S.-Mexico border fence and immigrant detention practices is making it difficult for House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., to make progress on a broader, full-year $1.4 trillion spending bill. That measure is needed to implement the terms of last summer’s hard-won budget agreement, which distributed budget increases to both the Pentagon and domestic agencies. McConnell is personally invested in a successful budget outcome and both he and Pelosi have long histories on appropriations. The other top issue is a legislative update to the landmark North American Free Trade Agreement, which is especially sought by Trump’s GOP allies and the party’s Main Street supporters. Pelosi is the key figure on trade, which is always a tricky issue for Democrats, even if the politics of the new United States-Mexico-Canada Agreement are nowhere nearly as divisive as NAFTA was 26 years ago. Passage of NAFTA in 1993 badly split House Democrats, but Pelosi, who represents the Port of San Francisco, voted “aye,” as did Majority Leader Steny Hoyer, D-Md., and powerful Ways and Means Committee Chairman Richard Neal, D-Mass. Neal is leading a working group on the measure and says the group is “on the 5-yard line” and the optimistic take is that he and Pelosi will bring USMCA in for an easy landing. The trade updates are generally seen as an improvement over NAFTA, whose provisions enforcing Mexican labor and environmental rules are considered inadequate by many Democrats. The selling points for the new pact are that it updates NAFTA for the 21st century with hard-won provisions on digital trade, intellectual property, financial services and agriculture trade. Still, any impeachment-related delays could tax patience and thrust politically freighted issues like the border wall and the updated U.S. trade pact directly into the heat of the presidential primary campaign. On spending, Trump is a wild card as usual. He singlehandedly drove the 35-day partial shutdown that spanned the changeover between GOP and Democratic control of the House last winter. He has struggled to win much wall funding from Congress, where lawmakers in both parties have other designs for the money. Trump has had more success in exploiting his transfer powers to siphon money from Pentagon anti-drug and military base construction accounts toward the wall, and construction is finally beginning on the new segments he has long promised. Trump could easily spin a successful wall narrative without much more in new appropriations. Simply funding the government on autopilot — though hardly anyone is advocating that — would give him perhaps $6 billion more this year. A battle over Trump’s powers to transfer military funding to wall building also has stalled an annual military policy bill that has become law for 58 years in a row. Trump’s anger at impeachment, his poisonous relationship with Pelosi, and his unpredictability and volatility are red flags for optimists. But the forces favoring an agreement are powerful, and McConnell — a top force behind the July budget pact — appears ready to get engaged more actively. Capitol Hill veterans say hardliners on both sides — including House progressives and White House budget chief Russell Vought — are an impediment to the kind of split-the-differences agreement that the current balance of power can produce. And there is still time for action if the momentum stalls, even if the odds get more dicey in a presidential election year. One of the benefits of limiting the duration of the upcoming stopgap spending bill, known as a continuing resolution or CR, is that is means another is needed before Congress adjourns for the year. Any December stopgap measure could also provide a way to ship some unfinished business on taxes, health care and pensions to Trump’s desk as part of a must-pass package. Top lawmakers hope that a full-year spending bill would serve the same purpose but acknowledge there are considerable obstacles. “I think it would be a terrible mistake if we were still in a continuing resolution after the first of the year for a whole host of reasons,” said top Senate Appropriations Committee Democrat Patrick Leahy of Vermont, citing shifting signals from the White House as contributing to the delays. “It has been difficult with the White House because … they have not always been consistent in what they want.”

Medicare, Social Security face shaky fiscal futures

WASHINGTON (AP) — The financial condition of the government’s bedrock retirement programs for middle- and working-class Americans remains shaky, with Medicare pointed toward insolvency by 2026, according to a report April 22 by the government’s overseers of Medicare and Social Security. It paints a sobering picture of the programs, though it’s relatively unchanged from last year’s update. Social Security would become insolvent in 2035, one year later than previously estimated. Both programs will need to eventually be addressed to avert automatic cuts should their trust funds run dry. Neither President Donald Trump nor Capitol Hill’s warring factions has put political perilous cost curbs on their to-do list. The report is the latest update of the government’s troubled fiscal picture. It lands in a capital that has proven chronically unable to address it. Trump has declared benefit cuts to the nation’s signature retirement programs off limits and many Democratic presidential candidates are calling for expanding Medicare benefits rather than addressing the program’s worsening finances. Many on both sides actually agree that it would be better for Washington to act sooner rather than later to shore up the programs rather than wait until they are on the brink of insolvency and have to weigh more drastic steps. Limiting her comments to Medicare, White House press secretary Sarah Sanders said the report highlights the need for “serious-minded” lawmakers to work with the administration on bipartisan changes to lower costs, eliminate fraud and abuse, and preserve the program for future generations. Sanders also took the opportunity to criticize Democrats’ calls to expand Medicare. She claimed such a step would amount to a “total government takeover of health care” that would cut out private-sector options, endanger access to health care for seniors and further strain the federal budget. But potential cuts such as curbing inflationary increases for Social Security, hiking payroll taxes or raising the Medicare retirement age are so politically freighted and toxic that Washington’s power players are mostly ignoring the problem. Arkansas Rep. Steve Womack, the senior Republican on the House Budget Committee, urged action, saying the financial condition of both programs is driving up federal spending, increasing budget deficits and crowing out other priorities. “We cannot afford to ignore this reality any longer,” Womack said. Later this year, Social Security is expected to declare a 1.8 percent cost-of-living increase for 2020 based on current trends, program officials say. The April 22 report by three Cabinet heads and Social Security’s acting commissioner urges lawmakers to “take action sooner rather than later to address these shortfalls, so that a broader range of solutions can be considered and more time will be available to phase in changes while giving the public adequate time to prepare.” If Congress doesn’t act, both programs would eventually be unable to cover the full cost of promised benefits. With Social Security that could mean automatic benefit cuts for most retirees, many of whom depend on the program to cover basic living costs. For Medicare, it could mean that hospitals, nursing homes, and other medical providers would be paid only part of their agreed-upon fees. In a glimmer of good news, Social Security’s disability program is now estimated to remain solvent for an additional 20 years, through 2052. Overall, however, Social Security would run out of reserves by 2035, one year later than projected in last year’s report. “We remain committed to further bolstering the programs’ finances, which will benefit from the long-term growth we will see as a result of the Administration’s economic policies,” said Treasury Secretary Steven Mnuchin. As an indication of Medicare’s woes, it would take a payroll tax increase of 0.91 percentage points to fully address its shortfall or a 19 percent cut in spending. Medicare’s problems are considered more difficult to solve, as health care costs regularly outpace inflation and economic growth. Social Security is the government’s largest program, costing $853 billion last year, with another $147 billion for disability benefits. Medicare’s hospital, outpatient care, and prescription drug benefits totaled about $740 billion. Taken together, the two programs combined for 45 percent of the federal budget, excluding interest payments on the national debt.

Final spending bill leaves out ‘dreamers,’ major wall money

WASHINGTON (AP) — Negotiators on a $1.3 trillion government spending bill dropped protections for so-called Dreamer immigrants and gave President Donald Trump only a partial victory on funding for his U.S.-Mexico border wall as talks entered the final stage on March 21. A meeting of top congressional leaders produced tentative accords on two tax provisions and a decision to strengthen the criminal background check system for gun purchases. House Speaker Paul Ryan, R-Wis., said an official agreement on the sweeping measure would likely come “very soon.” GOP aides said that Trump would win $1.6 billion for a border wall and physical barriers along the border, which would construct older wall designs and repair existing segments. But Trump would be denied a more recent, far larger $25 billion request for multi-year funding for the wall project. Democrats said just $641 million would go to new segments of fencing and walls that double as levees. Negotiators planned to unveil the massive government-wide spending bill later in the day in hopes of passing it before a March 23 midnight deadline to avoid a government shutdown. A senior administration official said the White House is generally happy with the emerging deal. The person said the plan addresses the president’s top priorities, including a large funding increase for the military, border security measures and money to fight the opioid epidemic. The top four leaders of both House and Senate met March 21 and emerged saying they basically had a deal. “We’re finalizing,” said House Speaker Paul Ryan, R-Wis., told reporters, saying the bill would shortly be made public. “We’re in a good place.” The bill would give Trump a huge budget increase for the military, while Democrats would cement wins on infrastructure and other domestic programs that they failed to get under President Barack Obama. It funds a 2.4 percent pay raise for military personnel touted by Republicans. The aides required anonymity because the agreement is not yet public. Battles over budget priorities in the huge bill were all settled, while a handful of non-budget issues remained, including a GOP effort to fix a poorly drafted section of the recent tax cut law that is harming Midwestern grain companies. At Wednesday’s meeting, GOP aides said, top leaders including Ryan agreed to fix this so-called grain glitch — while adding a tax-credit provision sought by Democrats to boost low-income housing units. They also said the agreement would add “Fix NICS” legislation designed to beef up compliance with gun background check reporting requirements. As expected, the measure won’t renew protections for young Dreamer immigrants facing possible deportation. It also won’t provide subsidies to insurers who cut costs for low-earning customers. And it won’t have federal payments to carriers to help them afford to cover their costliest clients. Another fight would remove an earmark protecting money for a rail tunnel under the Hudson River that’s a top priority of Trump’s most powerful Democratic rival, Senate Minority Leader Chuck Schumer, D-N.Y. The project would remain eligible for funding, however, and a Schumer aide said the project was likely to win well more than half of the $900 million sought for Gateway this year under rules governing various Department of Transportation accounts. The measure on the table would provide major funding increases for the Pentagon — $80 billion over current limits — bringing the military budget to $700 billion and giving GOP defense hawks a long-sought victory. “We made a promise to the country that we would rebuild our military. Aging equipment, personnel shortages, training lapses, maintenance lapses — all of this has cost us,” said House Speaker Paul Ryan, R-Wis. “With this week’s critical funding bill we will begin to reverse that damage.” Domestic accounts would get a generous 10 percent increase on average as well, awarding Democrats the sort of spending increases they sought but never secured during the Obama administration. Both parties touted $4.6 billion in total funding to fight the nation’s opioid addiction epidemic, a $3 billion increase. More than $2 billion would go to strengthen school safety through grants for training, security measures and treatment for the mentally ill. Medical research at the National Institutes of Health, a longstanding bipartisan priority, would receive a record $3 billion increase to $37 billion. Community development block grants, which are flexible funds that are enormously popular with mayors and other local officials, would receive a huge $2.4 billion increase to $5.2 billion despite being marked for elimination in Trump’s budget plan. And an Obama-era transportation grant program known as TIGER would see its budget tripled to $1.5 billion. Head Start for preschoolers would get a $610 boost, while an additional $2.4 billion would go for child care grants. “We have worked to restore and in many cases increase investments in education, health care, opioids, NIH, child care, college affordability and other domestic and military priorities,” said Sen. Patty Murray, D-Wash., a key negotiator of the measure. Agencies historically unpopular with Republicans, such as the IRS, appear likely to get increases too, in part to prepare for implementation of the Republicans’ recently passed tax measure. The Environmental Protection Agency, always a GOP target, would have its budget frozen at $8 billion. Lawmakers agreed on the broad outlines of the budget plan last month. The legislation implementing that deal is viewed as possibly one of few bills moving through Congress this year, making it a target for lawmakers and lobbyists seeking to attach their top priorities. And while Democrats yielded on $1.6 billion in wall funding, none of that money would go for the new prototypes that Trump recently visited in San Diego. Negotiators rejected Trump’s plans to hire hundreds of new Border Patrol and immigration enforcement agents, congressional aides said. Republican conservatives are dismayed by the free-spending measure, which means Democratic votes are required to pass it. That gave Democrats leverage to force GOP negotiators to drop numerous policy riders that Democrats considered poison pills.

GOP advances tax overhaul; shutdown still a threat

WASHINGTON (AP) — Republicans held together and shoved their signature tax overhaul a crucial step ahead Nov. 28 as wavering GOP senators showed a growing openness. But its fate remained uncertain, and a planned White House summit aimed at averting a government shutdown was derailed when President Donald Trump savaged top Democrats and declared on Twitter, “I don’t see a deal!” “It’s time to stop tweeting and start leading,” Senate Minority Leader Chuck Schumer retorted after he and House Minority Leader Nancy Pelosi rebuffed the budget meeting with Trump and top Republicans. Trump lunched with GOP senators at the Capitol and declared it a “love fest,” as he had his previous closed-doors visit. But the day underscored the party’s yearlong problem of unifying behind key legislation — even a bill slashing corporate taxes and cutting personal taxes that’s a paramount party goal. The Nov. 28 developments also emphasized the leverage Democrats have as Congress faces a Dec. 8 deadline for passing legislation to keep federal agencies open while leaders seek a longer-term budget deal. Republicans lack the votes to pass the short-term legislation without Democratic support. In a party-line 12-11 vote, the Senate Budget Committee managed to advance the tax measure to the full Senate as a pair of wavering Republicans — Wisconsin’s Ron Johnson and Tennessee’s Bob Corker — fell into line, at least for the moment. In more good news for the GOP, moderate Sen. Susan Collins of Maine said it was a “fair assumption” that she was likelier to support the bill after saying Trump agreed to make property taxes up to $10,000 deductible instead of eliminating that break entirely. But the fate of the legislation remained uncertain as it headed toward debate by the full Senate, which Republicans control by a slender 52-48. GOP leaders can afford just two defectors, and a half dozen or more in their party have been uncommitted. They include some wanting bigger tax breaks for many businesses but others cringing over the $1.4 trillion — or more — that the measure is projected to add to budget deficits over the next decade. “It’s a challenging exercise,” conceded Senate Majority Leader Mitch McConnell of Kentucky. He compared it to “sitting there with a Rubik’s Cube and trying to get to 50” votes, a tie that Vice President Mike Pence would break. Corker, who’s all but broken with Trump over the president’s behavior in office, is among a handful of Republicans uneasy over the mountains of red ink the tax measure is expected to produce. He said he was encouraged by discussions with the White House and party leaders to include a mechanism — details still unknown — to automatically trigger tax increases if specified, annual economic growth targets aren’t met. “I think we’re getting to a very good place on the deficit issue,” Corker said. But other Republicans are wary of backing legislation that would hold the hammer of potential future tax cuts over voters’ heads. “I am not going to vote to automatically implement tax increases on the American people. If I do that, consider me drunk,” said Sen. John Kennedy of Louisiana. Collins said she’d also won agreement that before completing the tax measure, Congress would approve legislation restoring federal payments to health insurers that Trump scuttled last month. That bill has had bipartisan support, but it’s unclear if Democrats would back it amid partisan battling over the tax bill. McConnell and House Speaker Paul Ryan, R-Wis., met with Trump at the White House despite the top Democrats’ no-shows. Trump highlighted their absence by appearing before reporters flanked by two empty chairs bearing Schumer’s and Pelosi’s names. Trump said Democrats would be to blame for any shutdown, despite GOP domination of government. “If it happens it’s going to be over illegals pouring into the country, crime pouring into the country, no border wall, which everyone wants,” he said. He also said North Korea’s launch of a ballistic missile Nov. 28 should prompt Democrats to renew negotiations over the spending legislation, which includes Pentagon funding. “But probably they won’t because nothing to them is important other than raising taxes,” Trump said. Democrats noted that in May, Trump tweeted the country “needs a good ‘shutdown’ in September to fix mess!” In a tweet of her own Nov. 28, Pelosi said Trump’s “verbal abuse will no longer be tolerated,” adding in reference to the empty-chairs show, “Poor Ryan and McConnell relegated to props. Sad!” A temporary spending bill expires Dec. 8 and another is needed to prevent a government shutdown. Hurricane aid to help Texas, Florida, Puerto Rico and the Virgin Islands is also expected to be included in that measure, as well as renewed financing for a children’s health program that serves more than 8 million low-income children. Democrats are also pressing for legislative protections for immigrants known as “Dreamers.” Conservative Republicans object to including that issue in the crush of year-end business. But GOP Rep. Carlos Curbelo of Florida joined Democrats in saying he won’t vote for the spending bill unless the immigrant issue is resolved. AP reporters Matthew Daly, Kevin Freking and Stephen Ohlemacher contributed.

Senate GOP tentatively agrees to $1.5T plan on tax cuts

WASHINGTON (AP) — Senate Republicans are zeroing in on a tax outline that would add about $1.5 trillion to the government’s $20 trillion debt over 10 years, justifying the spurt of red ink with promises of surging economic growth and a burst of new revenues. Tennessee Sen. Bob Corker, a member of the chamber’s dwindling band of deficit hawks, and Sen. Pat Toomey, R-Pa., one of the chamber’s more ardent believers that tax cuts can pay for themselves, said they sealed an agreement on Sept. 19. The $1.5 trillion figure, confirmed by congressional officials familiar with the agreement, would allow deeper cuts to tax rates than would be allowed if Republicans followed through on earlier promises that their upcoming tax overhaul wouldn’t add to the deficit. It’s likely to be announced on Sept. 20. The agreement would represent an about-face for Capitol Hill GOP leaders such as Senate Majority Leader Mitch McConnell, R-Ky., and House Speaker Paul Ryan, R-Wis., who for months have promised that the GOP tax overhaul would not add to the budget deficit, currently estimated to hit about $700 billion this year. The broad-brush tax cut number, if approved by the Senate, would pave the way for the Senate’s tax writers to slice corporate and individual tax rates and curb tax breaks in hopes of boosting economic growth to 3 percent or more as promised by President Donald Trump. Corker had pressed for a lower figure, saying he didn’t want the GOP tax plan to cause the debt to spiral further. Now, he’s taking a more generous view of so-called dynamic scoring, which takes the economic effects of legislation into account when determining its impact on the government’s books. “We hope this is highly pro-growth. We hope, by the way, that Congress will be firm in closing loopholes,” Corker said. “Honestly, that worries me the most about all of this.” The divide between the Senate GOP’s deficit hawk and “supply side” wings had taken weeks to resolve. Republicans preached a hard line on the deficit while Barack Obama was president but are taking a more lenient approach now that Trump is occupying the Oval Office, promising a huge budget boost for the military and signaling an openness to working with Democrats to increase domestic agency budgets, too. Unlike the House, Senate Republicans aren’t planning to pair the tax measure with spending cuts. The work of the budget panel is critical since Republicans need to agree on a budget plan in order to pass follow-up tax legislation without fear of a filibuster by Democrats. But both House and Senate Republicans are divided and the budget debate is months behind schedule. Earlier Sept. 19, Sen. Ron Johnson, R-Wis., one of the budget panel’s more ardent advocates of tax cuts, said a 10-year, $1.5 trillion tax cut “ought to be a minimum.” Proponents of strict government spending policies swiftly condemned the apparent agreement, warning of further ballooning of the national debt. “With the U.S. in such a dangerous fiscal situation, policymakers shouldn’t even consider voluntarily adding another $1.5 trillion to our national debt,” Michael Peterson, president of the Peter G. Peterson Foundation, said in a statement. “Reaching $20 trillion in debt should be a wake-up call to solve our fiscal challenges, not an invitation to add to the problem.” Many Republicans in Washington promise that cutting corporate and individual rates and ridding the code of inefficient tax breaks, deductions and preferences will boost the economy and cause a burst of new revenue. But the outlines of their tax plan itself remain secret, and it’s not clear how successful they will be in cleaning up the loophole-choked tax code. Congress’ impartial scorekeepers have accepted the premise of such dynamic scoring, but past studies by the Joint Tax Committee and Congressional Budget Office have been cautious about how much economic growth and tax revenues would follow tax cuts. Only Sept. 18, Corker opposed an overwhelmingly popular defense measure that would smash the budget, saying “the inability to get our fiscal house in order is the greatest threat to our country.” The development also means, under the tricky Senate rules governing fast-track debate on the budget and taxes, some of the provisions in the upcoming tax measure would have to be temporary.

Trump: Government ‘needs a good shutdown’

WASHINGTON — President Donald Trump declared May 2 the U.S. government “needs a good shutdown” this fall to fix a “mess” in the Senate, signaling on Twitter his displeasure with a bill to keep operations running. But Republican leaders and Trump himself also praised the stopgap measure as a major accomplishment and a sign of his masterful negotiating with Democrats. On the defensive, Trump and his allies issued a flurry of contradictory statements ahead of key votes in Congress on a $1.1 trillion spending bill to keep the government at full speed through September. After advocating for a future shutdown, the president hailed the budget agreement as a boost for the military, border security and other top priorities. “This is what winning looks like,” Trump said during a ceremony honoring the Air Force Academy football team. “Our Republican team had its own victory — under the radar,” Trump said, calling the bill “a clear win for the American people.” Late in the day, the White House said he would indeed sign the bill. Yet Trump’s morning tweets hardly signaled a win and came after Democrats gleefully claimed victory in denying him much of his wish list despite being the minority party. They sounded a note of defeat, blaming Senate rules for a budget plan that merited closing most government operations. But the White House then rallied to make the case to the public — and perhaps to a president who famously hates losing — that he actually had prevailed in the negotiations. Budget Director Mick Mulvaney briefed reporters twice within a few hours to adamantly declare the administration’s success. He was joined at his second briefing by Homeland Security Secretary John Kelly. And Trump himself used the normally non-political football ceremony to proclaim his own success. Mulvaney, criticizing Democrats for celebrating, said Trump was “frustrated with the fact that he negotiated in good faith with the Democrats and they went out and tried to spike the football to make him look bad.” Asked how the president would define a “good shutdown,” Mulvaney suggested “it would be one that fixes this town.” Trump’s embrace of such a disruptive event came days after he accused Senate Democrats of seeking that same outcome and obstructing majority Republicans during budget negotiations. Lawmakers announced Sunday they had reached an agreement to avoid a shutdown until Oct. 1 — a deal that does not include several provisions sought by Trump, including money for a border wall. It also came at the start of a week in which the House is considering a possible vote on a health care overhaul that would repeal and replace Barack Obama’s Affordable Care Act. The spending bill was set for a House vote on May 3, when it’s likely to win widespread bipartisan support, though a host of GOP conservatives will oppose the measure, calling it a missed opportunity. House Speaker Paul Ryan of Wisconsin defended the package, calling it an “important first step in the right direction” that included a “big down payment” on border security and the military. And Senate Majority Leader Mitch McConnell of Kentucky said the bill “delivers some important conservative wins.” In fact, the White House on Monday had praised the deal as a win for the nation’s military, health benefits for coal miners and other Trump priorities. But by May 2, the president sounded off on Twitter. “The reason for the plan negotiated between the Republicans and Democrats is that we need 60 votes in the Senate which are not there!” He added that we “either elect more Republican Senators in 2018 or change the rules now to 51 (percent). Our country needs a good ‘shutdown’ in September to fix mess!” That contradicted Trump’s message of less than a week ago. On April 27, Trump had tweeted that Democrats were threatening to close national parks as part of the negotiations “and shut down the government. Terrible!” He also tweeted at the time that he had promised to “rebuild our military and secure our border. Democrats want to shut down the government. Politics!” His May 2 tweets about Senate procedures came after Senate Republicans recently triggered the “nuclear option” to eliminate the 60-vote filibuster threshold for confirming Supreme Court Justice Neil Gorsuch. That change allowed the Senate to hold a final vote to approve Gorsuch with a simple majority, an approach that has not been used for legislation. Top Senate Republicans dismissed the idea of changing filibuster rules for a spending bill. “It would fundamentally change the way the Senate has worked for a very long time,” McConnell said. “We’re not going to do that.” Any future shutdown would likely cost the federal government billions of dollars. The 16-day partial shutdown in 2013 cost $24 billion, according to Moody’s and Standard and Poor’s. That included lost revenue for the national parks. “President Trump may not like what he sees in this budget deal, but it’s dangerous and irresponsible to respond by calling for a shutdown,” said Sen. Patty Murray, D-Wash. Senate Democratic leader Chuck Schumer of New York said the spending agreement came from a “bipartisan negotiation,” adding, “The leaders — Democrat, Republican, House and Senate — work well together. And why ruin that?” Throughout the day, the White House and congressional Republicans pressed to reverse a Washington narrative that the catchall bill is a win for Democrats. Mulvaney cited a $15 billion infusion of defense spending — about half of what Trump asked for in March — as a huge win. He also claimed credit for $6 billion in war funding approved by former President Obama as a Trump win. He also cited $1.5 billion in emergency money for border security. He correctly noted that the administration succeeded in breaking the link — forged over several Obama-era spending deals — that required that any increases in military spending be matched by an equal, dollar-for-dollar increase for nondefense programs.
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