Budget bill aims to deceive voters

 

Gordon L. Weil

In 2017, the Trump tax bill cut both personal and business income taxes.  The reduction came at a high cost to the U.S. Treasury, boosting the national debt.

To reduce the effect, the tax cuts for individuals were slated to expire this year.  If Trump were elected to a second term, individual rates would increase after he left office.  He would “rent” political support and left it to the 2024 campaign to see if candidates would “buy” and make the lower taxes permanent.  That would have a cost, but not on his watch.

By this year, people had become accustomed to the new tax rates.  Political reality required extending the individual rates to parallel the business rates.  Republicans asserted the extension would be painless in terms of the federal debt.  Though Trump says readopting the individual rates is part of the nation’s largest tax cut, he also denies it’s a tax cut when it comes to the debt.

The 2017 tax changes were made permanent in the One, Big, Beautiful, Bill.  The Republicans found a way to make it seem that the change came at no cost.   They claim that the original reduction increased debt, but the mere extension beyond its scheduled end added nothing more.

If that lie were true, then why was the individual tax cut set for a limited period in 2017?  Then, the concern was limiting growth in the national debt. Now, that growth will be built in, but the GOP will say that reviving a tax cut that was due to expire to relieve the debt, won’t add to it.

This process revealed two major elements of Trump tax policy.  Set changes in the tax laws with delays that will cushion their costly effects until after the next election.  It’s an application of Lincoln’s saying: “You can fool all of the people some of the time, and some of the people all the time.”

The second element is that the American government now assumes the responsibility for establishing the laws of economics.  When you can tell the people that the national debt will grow larger, but that’s not an increase, the government has reached the point where it can create a new reality.

This obviously works for the solid GOP government. The OBBB contains many provisions that have timers attached.  Benefits come quickly and could appeal to voters next year, though the timers would end the changes later. Wanna bet?

Here are some key timers:

● Big boost in exemption for state and local taxes – for five years

● No taxes on tips – until 2028

● Tax break on auto loans – 2025-2028

● Increased tax deduction for seniors – until 2028

● Trump child saving subsidy – 2025-2028

● Phase-out of wind and solar subsidies – delayed a year

● Border spending – increase by ten times, but over five-year period.

It’s easy to see that some of these timers are meant to fulfill Trump’s campaign promises but are not now expected to outlast him by much.  This includes taxes on tips and auto loans.  As for his promise not to tax Social Security, while its leaders claim that it’s included, it did not happen.  The increased seniors exemption, a partial substitute, is also subject to a timer.

Without congressional approval and with the Supreme Court’s seal of approval, Trump is changing longstanding understandings of how the government works.  As previously noted, this resets the constitutional clock and creates a new original for which there will be a new originalism.

When it comes to the economy, only one institution stands in the way.  The Federal Reserve, established in 1914, is expressly meant to serve independently. 

Its seven members are appointed for 14-year terms, long enough to withstand the political pressures of even a person serving as president over a 12-year period, like Trump.  Policy is set by a 12-member body that includes representatives chosen by regional Federal Reserve banks.

The government’s economic policy takes two forms.  The political branches set fiscal policy – government spending, taxation and debt.  The Fed sets monetary policy – controlling inflation and limiting unemployment.  Fiscal management is subject to review by the voters; monetary policy is left to the independent Fed non-political, economic experts.

Seeking to gain control of the Fed, Trump would oust Fed Chair Jerome Powell, but can’t.  Trump will appoint a successor next year, but Powell can remain on the Fed Board.  And, even with a new chief, Trump could not count on other Fed leaders falling in line.

While it is turning control over independent agencies over to Trump, the Supreme Court stresses the Fed’s independence from the executive.

Lincoln concluded, “you cannot fool all of the people all of the time.”   Trump may be content to “fool enough of the people, enough of the time.”

 

All power to the president: the 2026 budget

 

Gordon L. Weil

“I know nothing about Project 2025,” Trump said during the 2024 campaign.  For a person who knew nothing, he went on to assert, “I disagree with some of the things they’re saying and some of the things they’re saying are absolutely ridiculous and abysmal.” 

Either he was dissembling or he is a quick learner.  He named Russell Vought, chief architect of Project 2025, to head the Office of Management and Budget, and Vought has just issued Trump’s proposed 2026 budget. Project 2025 permeates it.  With a straight face, Vought says it’s pure Trump.  It’s a chicken-or-egg proposition. Which plan came first, Trump’s or Project 2025?

Vought just sent the budget to Senate Appropriations Committee chair Susan Collins.  She promptly found a lot wrong with it.  That’s not surprising, because most presidential budgets are not adopted by Congress.  Members favor appropriations that help them win elections, so their priorities differ from the president’s.

The budget reveals the essential elements of Trump’s thinking about government.  It confirms virtually everything included in his torrent of executive orders.  It formally recognizes that Congress decides federal spending, but really expects it to issue a seal of approval on what he has already done without its approval.

Any change in the proposed budget is accompanied by a note explaining the reasoning behind the subtraction or addition.  In some cases, the statement is anecdotal, with a general policy growing out of a single person’s experience or opinion.

Here are seven keys to the proposed budget.

1.  It is aimed at eliminating whatever Joe Biden did.  It reads less like a proposal for funding the appropriate priorities for the U.S., and more like a campaign manifesto.  It would reshape the government, which Vought sees as socialist, but instead of looking forward, it keeps looking backward.  Pointless, since Biden won’t be back.

2.  It’s based on the theory that because he won the election, Congress should leave policy to him. The budget focuses on carrying out President Trump’s aims, providing Congress with a checklist of items to approve. 

This may constitute progress.  At least, instead of government by executive order, it recognizes the need for congressional action.  Still, the underlying assumption of presidential policy supremacy is far from the Constitution that says Congress (Article I) makes policy and the president (Article II) executes it.

3. Congress should transfer legislative power to the president.  Many items in the proposed budget would give the president power to legislate through executive orders.  That could eliminate court challenges, which now claim Trump has exceeded the powers given him by law.  No more fighting about executive orders, he implies, just authorize them.

Here’s an example. Should Congress decide on U.S. participation in the United Nations? Not here. The budget would create a $2.9 billion America First Opportunity Fund.  Foreign policy and UN dues would be paid out of this fund, entirely at Trump’s discretion.  It could become a tool for his “art of the deal.”

4.  Trump gets revenge.  Trump defunds what he sees as hostile agencies. The budget would cut $18 billion from the National Institutes for Health, punishing the agencies for having failed to agree with him on the origins of Covid-19.   The FBI is severely cut, paying for having investigated him.  But Homeland Security gets almost $44 billion more to build the Wall and keep mass removals growing.

5. The crusade against “woke” continues.  Any activity that even faintly looks like help for any group that has suffered from discrimination must go.  In some cases, the host agency itself is also swept away.

6.  Much health care and scientific research disappears.  But Health and Human Services Secretary Robert Kennedy gets $500 million for “Make America Healthy Again.”  When was America healthy?  The amount seems to be a round number without a cost basis.

7. The bipartisan deal balancing military and non-military discretionary outlays is gone.  Now non-military, like health, education and low-income help would be cut by $163 billion, more than one-fifth, while military spending breaks the trillion-dollar level.  Even then, GOP senators think that Trump did not go far enough.

Many of these Trump priorities are likely to make it into the final budget.  That will create challenges for targeted states and individuals, plus Republicans in toss-up districts, and Democrats who want to find a way to take control of Congress.

This is Trump’s budget, thanks to Project 2025. The first question is whether congressional Republicans will endorse it or retake legislative control of their party’s agenda. 

But it also challenges the Democrats to come up with their own budget.  Their choice goes beyond taking potshots at the budget. They could come up with a comprehensive alternative. Both parties could seek compromise, thanks to the cooperative relationship between Collins and Sen. Patty Murray, the Democratic committee vice chair.

 

Shutdown crisis left big problems

 

Gordon L. Weil

This person has painful feet, which only get worse.  They have three ways to reduce their aching feet.

They could get a new pair of shoes, uncomfortable until broken in, but with a good fit afterwards.  Or they can hop on one foot, leaving only one foot in pain.  Or they can jump off a cliff and have no pain until they land, whenever that will happen.

The name of this person is America.  And the painful problem arises, not from shoes, but from the U.S. government always spending more money than it takes in.  Its hurtful budget habit is a symptom of a national illness that has infected the entire political system.  America’s government could get new shoes any day, but it doesn’t, because its paralyzed.

The annual deficit is about six percent of the entire value of the national economy.  Deficits in annual spending accumulate into the national debt that now equals the production of the entire economy.  Obviously, this cannot go on endlessly.

The new pair of shoes would take the form of a balanced budget, financed by debt to pay for long-term purchases and taxes, including increases when necessary, to pay for current operations.  Increasing taxes might be uncomfortable for a while, but it would reduce the pain before the debt kills the economy or cripples future generations.

Hopping on one foot happens when the government relies only on debt, while trying to cut spending and hoping to cut taxes.  But hoping and hopping get harder as the costs of new promises mount.  America gets a bit wobbly on its feet.

Or America can neither cut costs nor raise taxes.  It simply jumps off the cliff, spending and borrowing with its eyes closed, not thinking about the hard landing.

The budget bill passed just in time to avoid a government shutdown is a clear case of jumping off the cliff.  It kept the government running by extending an earlier budget, some of it wasteful and poorly aligned with current needs.   Seemingly do-good items like emergency aid and farm funding were tacked on. 

By preventing a government shutdown, the bill has been celebrated as a bipartisan legislative success. It passed mainly because neither party wanted the blame for closing the government.  In reality, it is a policy failure, because the two sides could not reach any agreement on a normal budget, the most basic function of Congress. 

The entire process revealed that most in Congress did not get the message of the election.  People don’t respect Congress, because it ignores their concerns in favor of playing its usual political games. More House Democrats than Republicans were needed to support the GOP Speaker’s budget deal, revealing how badly Washington is working. 

The original bill and the final version were Christmas trees, decorated with goodies for both parties.  Instead of understanding that voters prefer a practical government over one that uses debt without discipline, Congress continues to believe that the best solution is to throw money at any problem.  No wonder it’s not popular.

In effect, many voters have decided that the federal government has moved on from New Deal-style government to at least a partial return to more traditional American conservatism.  The business-as-usual of the past nine decades should be updated.  But its handling of the budget bill shows that Congress won’t change.    

The Democrats, as busy as the Republicans in adding tinsel to the tree, missed a great opportunity.  They could have promptly agreed with President-elect Trump (and Elon Musk, apparently his prime minister) on a bare extension of spending with no add-ons.  Where would that have left the House GOP?  Any added spending would have been passed in a new bill.

Instead, the Democrats blocked Trump’s demand to raise the debt limit, believing a higher cap would permit him to extend and even increase current tax cuts.  They wanted the GOP to accept full responsibility for piling on more debt.  The debt cap was not in the final bill.

In reality, many Democrats, Trump and some Republicans agree that the debt ceiling is nothing more than an attention-grabbing tool to be used in budget negotiations.  Only hardline Republicans seem willing to push the U.S. into default, if that’s what it takes to reduce spending. 

The debt ceiling could be a clear violation of the Fourteenth Amendment requiring the federal government to make good on the borrowing arising from its spending commitments.   This would have been the moment to kill this troublesome financial gimmick.

Trump’s grandstanding and hostile behavior, the unrealistic Democratic hopes of restoring the old ways and the mindless Republican warfare against compromise come at a price.  They lead Washington to ignore popular demands for a well-functioning government that produces practical results.

The federal budget fiasco just proved that.