Congress

Bipartisan 'Bucket of Garbage' Budget Bill Contains $50 Billion in Special Interest Tax Breaks

On their own, some of those tax breaks might be defensible. Dumping them into a must-pass budget bill is not.

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Buried within more than 2,300 pages of legislation authorizing more than $1.4 trillion in spending is a collection of special interest tax incentives dumped into two crucial budget bills at the last minute—including tax breaks for racehorses, breweries, and biofuels.

Regardless of the merits of any of those individual policies, their last-second inclusion in massive, must-pass budget bills is more evidence that Congress' budget-making process is broken.

The House voted Tuesday to pass the two budget bills that must be signed by President Donald Trump before next week in order to avert a government shutdown. The Senate is expected to vote on the bills before the end of the week.

"What a bucket of garbage this bill is," tweeted Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan group that advocates for reducing the deficit. The last-second inclusion of so-called "zombie extenders"—temporary tax breaks, including some that had previously expired as far back as 2017—is "simply moronic," she wrote in a follow-up tweet.

Producers of biodiesel and the owners of short-line railroads (rail lines that connect to regional or national rail networks) stand to score some of the biggest Christmas presents once Congress passes the budget bills. Both interests had seen special tax breaks expire in 2017, but will now get retroactive tax breaks to cover the past two years and further tax breaks through 2022, according to The Wall Street Journal.

All told, there are more than two dozen industry-specific tax incentives included in the budget bills, Bloomberg reports. That includes one-year extensions for tax credits given to breweries, distilleries, owners of racehorses, motorsports race tracks, and producers of wind energy.

The Joint Committee on Taxation, a congressional number-crunching service, estimates that the temporary and extended tax breaks included in the budget bills will cost about $54 billion over 10 years.

On their own, many of the small tax breaks included in the budget bills might be defensible. Distilleries, for example, faced the prospect of a 400 percent increase in federal alcohol excise taxes on January 1, according to the Distilled Spirits Council, which praised the one-year extension of a reduction in that tax.

But even when the policy is sound, the process is a total mess. If Congress believes there is a good reason to continue giving specific tax breaks to distilleries or the horse-racing industry, then it should act to make those tax breaks permanent. And it should do so as part of a deliberative process that determines budgetary priorities, rather than tacking a temporary extension onto a must-pass budget bill.

Indeed, one of the arguments Republicans used to justify cutting the corporate income tax from 35 percent to 21 percent in 2017 was that it would eliminate the need for so many industry-specific tax breaks. Good tax policy would be a lower rate and fewer carve-outs.

Retroactive tax breaks—like the one for bio-diesel, a top priority for lawmakers from Midwestern states particularly—make even less sense. Why should the government incentivize decisions that those businesses made years ago? That's just a last-second giveaway to politically connected businesses who hired good lobbyists.

Even without the temporary tax credit extensions, the budget bills are a fiscal disaster. All told, they will add an estimated $500 billion to the national debt over the next decade. Most of that total comes from the repeal of three taxes that were originally part of the Affordable Care Act, including a tax on medical devices and another tax on high-end health insurance policies.

Good budgeting requires setting priorities based on the fact that the federal government collects a finite amount of revenue each year. Collecting less tax revenue requires spending less money; spending more money requires increased taxes. Congress has proven, once again, that it is unable or unwilling to understand that.

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  1. Even without the temporary tax credit extensions, the budget bills are a fiscal disaster. All told, they will add an estimated $500 billion to the national debt over the next decade. Most of that total comes from the repeal of three taxes that were originally part of the Affordable Care Act, including a tax on medical devices and another tax on high-end health insurance policies.,

    No, all of that comes from spending. Tax cuts do not create the deficit. Spending creates the deficit. Fuck you, you God damned little Marxist bastard. Allowing people to keep more of their own money is not the same as stealing it and spending it.

    And it is not the AFA. It is obamacare. That son of bitch owns that and his name should always be attached to it. I know all of reason loved Obama with all of their heart. They shouldn’t deprive him of his signature achievement.

    1. UFA is more like it. The money I spend on health care doubled within a couple years. Unaffordable.

      1. It was a fucking crime.

      2. Only doubled? Lucky bastard.

    2. Tax cuts do not create the deficit. Spending creates the deficit.

      stevecarellthankyou.gif

    3. Yeah, when you start on the wrong side of possession, taking less becomes giving! All money belongs to government, and we’re damn lucky they let us keep anything at all! Why do you refuse to start from this absurd unquestionable premise?

      Haha.

    4. Who was the writer at Reason who showed through lots of historical data that, no matter how much you tax, you only get about 19 percent of GDP historically? Tax more, and people shelter income in various methods that have little to do with growing an economy. Tax less, (and consistently, so people can plan) and people invest and do productive things with their money.

      The US is nowhere near the side of the revenue curve where increasing taxes will result in increased total revenues.

      We spend too goddamn much. Nobody wants to tell Grandma and Grandpa or the broke to pay their own medical bills. (Or to live with them, but that’s another issue.) Nobody wants the inner cities to riot, which is the reason the EBT/Section 8 spigot is going to be the very last thing that gets shut off when funds get tight. And nobody wants to tell the rest of the world to get off their asses and spend money on their own damn defense, if they hate the Chinese that much.

      Let’s see: Medicaid/Medicare, Defense, HHS/Income and Housing Security. That’s what? 65% or so of the outlays, (counting SS, which should really just be folded into general expenditures as welfare).

      Get that under control, and the US’d run a surplus.

  2. >>tax breaks … will cost

    nope.

  3. but it will trickle down to all! LOL

  4. There should be no tax breaks for anyone.
    Everyone should be willing to donate their entire paycheck to those magnificent people in the IRS so our beloved betters can throw us a few crumbs like they do in that enviable socialist paradise called Venezuela.
    So let’s give Uncle Sam all our money and quit wasting it on such needless luxuries as food, utilities, houses, toilet paper, clothes, cars and medical expenses.
    Let our ruling elites dole out the money for us.
    This way, we will all be finally happy knowing what starvation, deprivation, want and need is finally at our doors as a welcoming gift only the socialists can give us.

  5. Buried within more than 2,300 pages of legislation authorizing more than $1.4 trillion in spending

    is the requirement that all future legislation be read aloud on the floor by any congresscreature who wishes to vote for it.

    Who would know?

  6. Would any of us be surprised if this massive spending bill didn’t include at least a dozen unconstitutional spending items favored by the very same folks that have just spent the better part of today demanding that Congress “uphold the Constitution” and “Save the Republic?”

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