Calling all Republicans, calling all Republicans. Hello, is anyone home?

More of This for More of That

The GOP House Ways and Means Committee supports expanding child tax credits and an affordable housing expansion.

In return, Democrats will allows the GOP to extend immediate 100% depreciation of specified investments.

As an added bonus (I wonder who fought for this one), there are tax breaks for Certain Residents of Taiwan.

The GOP House Ways and Means Committee calls this The Tax Relief for American Families and Workers Act of 2024

The Tax Relief for American Families and Workers Act of 2024

• Child Tax Credit: Under current law, the maximum refundable child tax credit is limited to $1,600 per child for 2023. The new maximum refundable amount per child is $1,800 in tax year 2023, $1,900 in tax year 2024, and $2,000 in tax year 2025. In addition, there is an inflation adjustment for years 2024 and 2025.
• Deduction for Research and Experimental Expenditures: Current law provides that research or experimental costs paid or incurred in tax years beginning after December 31, 2021, are required to be deducted over a five-year period. Research or experimental costs that are attributable to research that is conducted outside of the United States are required to be deducted over a 15-year period. The provision delays the date when taxpayers must begin deducting their domestic research or experimental costs over a five-year period until taxable years beginning after December 31, 2021, and before January 1, 2026. A provision extends the 100-percent bonus depreciation for qualified property placed in service after December 31, 2022, and before January 1, 2026.
• Special Rules for Taxation of Certain Residents of Taiwan: This section creates new section 894A of the IRC, providing substantial benefits to Taiwan residents. The new tax code section does not come into effect until Taiwan provides the same set of benefits to U.S. persons.
• Assistance for Disaster-Impacted Communities: This section extends the rules for the treatment of certain disaster-related personal casualty losses as passed in the Taxpayer Certainty and Disaster Tax Relief Act of 2020, including any area with respect to which a major disaster was declared by the President during the period beginning on January 1, 2020, and ending 60 days after the date of enactment of the proposal if the incident period of the disaster.
• Affordable Housing Assistance: This provision boosts the State Housing Credit Ceiling for Low-Income Housing Credit. In calendar years 2018 through 2021, the 9 percent LIHTC ceiling was increased by 12.5 percent, allowing states to allocate more credits for affordable housing projects. This provision restores the 12.5 percent increase for calendar years 2023 through 2025 and is effective for taxable years beginning after December 31, 2022.

$78 Billion Cost

The WSJ notes Bipartisan Support for this package would cost $78 billion.

The deal comes from Sen. Ron Wyden (D., Ore.) and Rep. Jason Smith (R., Mo.), ideological opponents who found common ground after months of talks.

Their proposal would retroactively reverse several business-tax changes that had been set in motion by Republicans in the 2017 tax law and took effect over the past few years. Companies with interest costs, capital expenses and research spending would all benefit.

Smith, chairman of the House Ways and Means Committee, and Wyden, chairman of the Senate Finance Committee, would also provide low-income households with more money from the child tax credit. That expansion would start with the 2023 tax returns that people will begin filing Jan. 29.

Senate Majority Leader Chuck Schumer (D., N.Y.) said he backed the deal and hoped Senate Republicans would join in support.

“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. 

That phrases strikes me as something I have heard before. I am struggling to recall who said that.

Well, not to worry. This proposal is from the Senate. The House would never approve any such expansion would it?

And House Speaker Mike Johnson has absolutely 100% ruled out another continuing resolution.

Hasn’t he? Let’s check in on that idea.

Congressional Leaders Strike Deal to Fund Government Into Early March

Mercy! What’s going on?

Please note Congressional Leaders Strike Deal to Fund Government Into Early March

Congressional leaders have reached an agreement on a new stopgap spending bill that would extend government funding into March, as House Speaker Mike Johnson (R., La.) sticks to his plan to defy the most brass-knuckled budget hawks in his party in a bid to avoid a government shutdown.

The government has been running on short-term spending laws, known as continuing resolutions, or CRs, since the start of the fiscal year on Oct. 1, as lawmakers continued to negotiate full-year funding.

Under the new agreement, parts of the government including the Transportation Department, the Agriculture Department and the Food and Drug Administration would be funded through March 1, while the rest of the government would be funded through March 8. Currently, those two sets of funds are due to expire on Jan. 19 and Feb. 2, respectively.

In reaching the agreement, Johnson risks triggering a backlash from House Republicans who are itching for another fight, even after last year’s bruising ouster of former House Speaker Kevin McCarthy (R., Calif.). Those Republicans want to use the spending agreement either to slash funding levels or extract policy concessions, such as stricter border-security measures.

This faction is furious that Johnson agreed to the $1.66 trillion topline level, accepting the same deal that McCarthy struck last year with President Biden in an agreement to suspend the debt ceiling. Johnson has been arguing that he was locked into that agreement, which was enshrined in the Fiscal Responsibility Act, and that he improved upon it and is now ready to fill in the details with policies that reflect Republican goals.

Fact Check Needed

I must be in an alternate universe time warp. What happened?

Johnson agreed to a $1.66 trillion deal. No one could possibly have seen this one coming.

Johnson has been arguing that he was locked into that agreement. I think we need to do a fact-check on that.

Flashback September 18, 2023, Mishtalk: Debt Ceiling Fight Begins, McCarthy Dares the House to Get Rid of Him

This phony budget crisis will end the same way it always does, with a Republican cave-in. But a House Speakership is on the line this time. That ups the popcorn rating index a bit more than normal.

House Speaker Kevin McCarthy’s Proposal

• 8% spending cut for domestic agencies
• Resumption of border wall construction
• No funds for Ukraine

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.

Hmm. The facts don’t seem to support what Mike Johnson said.

Wait a second this is all coming back to me. I now remember who it was that said it will be more of this for more or that.

Mike Johnson Sticks With $1.66 Trillion Budget Deal, Let’s Recap History

Please consider my January 13, 2024 post Mike Johnson Sticks With $1.66 Trillion Budget Deal, Let’s Recap History

Republican Hypocrites

If Republicans really wanted to do something good for the budget (they don’t as a class), they would do a full-year continuing resolution that would make actual cuts across the board, military and nondefense.

But they won’t. Nor is Johnson’s job at risk for proposing something even worse than what got then-speaker Kevin Johnson ousted.

Let’s go back to the beginning for a recap. … [huge recap of all the sorry details. I was blasted for repeated in the past for saying republicans would get nothing out of this.]

Where’s This All Going?

That’s the easiest question I asked today. Nowhere. Republicans will capitulate like they always do, with Democrats laughing all the way.

The only real question is how much damage Republicans do to themselves along the way.

Deficit Pot Keeps Expanding

And so, here we are adding another $78 billion into the pot today and we still have not addressed funding for Ukraine, funding for Israel, and funding for the wall or the border.

I have already described where that is headed.

There will be more funding for Ukraine and more funding for Israel in return for more funding for the wall.

Just Get it Over With

The longer this drags on, the more funding there will be for this in return for more funding for that.

This is how we went from a McCarthy-sponsored $1.471 trillion bill to Johnson’s $1.66 trillion bill.

To that, we now need to add $78 billion for child tax credits, etc.

And Biden wants an additional $113 billion for Ukraine and Israel.

Some Republicans want support for Ukraine, others want support for Israel. Guess what. It will be more of this in return for more of that.

What About the Border?

And where the hell is the wall and the border? No one has yet mentioned a number. Somehow, despite all these additions, Republicans never got a cent for the border.

Is this brilliance on the part of Democrats or brilliance on the part of Republicans?

That seems like an easy question but is it? Do republicans really want to cut the budget?

If they did, a full-year continuing resolution would automatically cut this (military spending) and that (non-military spending). Who wants this-that reduction? It seems neither party.

And the higher Republicans are willing to go for Biden’s “this” the more Republicans will get for “that” wall.

To toss out a number, let’s let’s guess $30 billion for the border (which Biden will try to find a way to not spend). The new additions are $78 billion (child tax etc) + $113 billion (Ukraine and Israel) + $30 billion (wall) = $221 billion.

But wait. Republicans need to brag about fiscal restraint so with “extremely hard bargaining” I expect something more along the lines of another $150 billion total.

Republicans will label this a success.

Meanwhile, let’s hope this does not drag on too much longer. The fiscal restraint success of the Republicans is getting harder and harder to take.

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