Congress

Here's What Congress Was Doing While You Were Watching the Kavanaugh Circus

The passage of tax reform 2.0 blows a huge hole in the budget, and a much-touted opioid bill might just make the crisis worse.

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Ron Sachs/CNP / Polaris/Newscom

While much attention was diverted by the political circus surrounding Judge Brett Kavanaugh on Thursday and Friday, Congress passed a massive spending bill and another round of tax cuts that will combine to blow an even bigger hole in the federal budget. Lawmakers also found time to pass a bill restricting Americans' access to prescription painkillers, something that's likely to force people who are dependent on or addicted to opioids (a distinction seemingly lost on legislators) to seek out more dangerous alternatives.

Let's start with the spending: Friday's passage of the House Republican's so-called Tax Reform 2.0 proposal will likely get heavy rotation in campaign ads over the next five weeks, even though the bill faces an uncertain future in the Senate. The bill does several things, but the key part of the proposal is the permanent extension of the individual and corporate income tax rate cuts enacted last year. Those lower rates are set to expire after 2025—reverting to their previous levels—but Republicans have been aiming for a permanent extension since before the final votes were cast on last year's tax bill.

If Republicans still cared about deficits, Tax Reform 2.0 would be a non-starter. Having last year's tax cuts expire in the middle of the next decade was a maneuver (or a gimmick, if you prefer) designed to limit the impact of tax reform on future deficits and the national debt.

Unsurprisingly, then, extending those tax cuts will add to the deficit. According to an analysis by the Joint Committee on Taxation, a nonpartisan number-crunching agency within Congress, the bill will add $631 billion to the deficit over a decade. While the JCT says an extension of the tax cuts will cause the economy to grow by about 0.5 percent in the years immediately after 2025, additional revenue from that growth will cancel out a mere $86 billion of the tax cut's impact on the deficit. Other analyses of the bill by the left-leaning Tax Policy Center and the right-leaning Tax Foundation make similar estimates about the long-term effect on revenue.

The bottom line? Even when accounting for increased economic growth, Tax Reform 2.0 comes with a price tag of more than $500 billion added to the deficit—an amount future taxpayers will have to cover.

The bill is not without its charms. A proposal to created so-called universal savings accounts would allow Americans to create tax-advantaged savings accounts where they could stash up to $5,000 annually without having to deal with all the restrictions and limitations that come with similarly structured 401(k) and IRA plans now. Encouraging savings—especially savings that are partially sheltered from the tax man—would be a positive step that helps families plan for the future.

But if you needed further evidence that Congress doesn't give a damn about planning for the country's future, look no further than the passage this week, in both houses, of a $853 billion spending bill. About $600 million of the spending is directed towards the Pentagon—boosting the military budget to levels not seen since the height of the Iraq War.

The bill is now on its way to President Donald Trump's desk. He must sign it before October 1 to avoid a government shutdown, which might be complicated by the lack of funding for his border wall.

The spending bill has raised the ire of the few fiscally conservative Republicans who sit in Congress. Rep. Justin Amash (R-Mich.) encouraged Trump not to sign the bill and blasted his fellow lawmakers for being "far worse than the politicians they once derided."

While the Kavanaugh hearings devolved into partisan acrimony, Congress was also serving up reminders of what happens when nearly everyone agrees. The Tax Reform 2.0 vote went mostly party line, but spending an obscene amount of money was, once again, a bipartisan affair in both the House and Senate.

So, too, was the passage of the Support for Patients and Communities Act, a much-touted bipartisan effort to address the opioid crisis in the most congressional of ways: by throwing money and more prohibition at the problem.

The final version of the bill, which passed the House 393-8 on Friday and now heads to the Senate, will spend about $8 billion on state-run opioid treatment centers and research into non-opioid pain killers. It also beefed up border security in the name of stopping the importation of illicitly manufactured fentanyl and other lab-made drugs.

But the bill may unintentionally increase demand for fentanyl and other drugs used by opioid addicts who can't get a legal fix. Several provisions in the proposal would restrict access to prescription painkillers; other aspects of the legislation would increase penalties for drug manufacturers and doctors deemed to have over-sold and over-prescribed opioids.

As J.J. Rich, a policy analyst for the Reason Foundation (which publishes this blog) notes in the November issue of Reason, previous crackdowns on prescription drugs have actually made the opioid crisis worse.

"It's clear that the black market has claimed the economy ceded by restrictions on the legal market," Rich notes, citing Data from the National Survey on Drug Use and Health show that pain reliever abuse rates have been flat since 2002. "When government restricts access to something people want, it drives demand to the black market. In this case, as opioids have become increasingly difficult to obtain legally in the last decade, users have switched to "diverted" prescription medications and illicit alternatives, including heroin. And just as Prohibition pushed bootleggers to switch from beer to potent bathtub gin, traffickers are increasingly adulterating their narcotics with potent synthetic opioids such as sufentanil—a substance that can be up to 500 times stronger than morphine."

Have a great weekend!