Santa Claus putting a lump of coal in Congress’s Christmas stocking.
The House of Representatives earlier this afternoon passed two bills to provide $1.4 trillion in funding for defense and non-defense spending programs that must be appropriated on an annual basis. As is often the case with must-pass legislation at the end of the year, these bills have become “Christmas trees” decorated with various policy riders and pet projects for members of both parties in Congress. What are the major provisions attached to this legislation that help add $500 billion to its price tag, and should they put Congress on the naughty or the nice list?
Nice: Averts a Government Shutdown
Despite having the presidency and majorities in both chambers of Congress, Republicans oversaw an unprecedented three government shutdowns – including the longest shutdown in 40 years – in 2018. Failure to pass a funding bill by the end of the week would have resulted in another shutdown at midnight on December 21st. Although keeping the lights on is one of the most basic responsibilities of government, House Democrats have shown themselves to be more-responsible fiscal stewards than the Republican majority they replaced by clearing this admittedly low bar. Successfully funding the government also discredits President Trump’s contention that they are “do-nothing Democrats” who have allowed their push to uphold the constitution through impeachment to detract from other legislative responsibilities.
Naughty: Time-Travelling Tax Cuts for Special Interests
In the face of widespread opposition from organizations across the political spectrum, Congress looks set to resurrect the so-called “Zombie tax extenders” that expired in 2017. These niche tax provisions give preferential treatment to a consortium of special-interest groups ranging from beverage distillers to racehorses. Lawmakers are essentially deciding now, on a bipartisan basis, that the $2 trillion tax bill Republicans passed while allowing the extenders to expire did not provide a big enough tax cut for the wealthy and well-connected. But what it is particularly outrageous about this year’s legislation is that it would apply these tax cuts retroactively, meaning that taxpayers can claim subsidies for activities they completed up to two years ago. It’s a shame policymakers aren’t also subsidizing the development of time travel for taxpayers in addition to tax cuts, since that’s the only way these policies could incentivize any useful economic activity or job creation.
Nice: Wins for Science and Public Health
Public health and scientific research – historically neglected parts of the federal budget – came out as huge winners today. The National Institutes of Health (NIH) won a 7 percent increase in medical research funding, including $25 million earmarked for it and the Centers for Disease Control (CDC) to study gun violence. This marks the first time such research has been funded since Congress clarified last year that a 20-year ban on research to “advocate or promote gun control” did not prohibit research on the causes of gun violence. Other federal agencies that conduct important scientific research, such as the Department of Energy’s Office of Science, the National Aeronautics and Space Administration (NASA), and the National Science Foundation (NSF) will also receive significant funding increases. Attached to the legislation is a provision that would raise the age at which people can buy tobacco products to 21, countering the rise in youth tobacco-product use. The legislation also includes policy from the CREATES Act, which would promote competition and reduce the cost of prescription drugs by removing obstacles to manufacturing generic alternatives.
Naughty: Defunding the Affordable Care Act
The funding bills aren’t all good news for health policy. Democrats have long touted the fact that their signature domestic policy accomplishment of the last decade – the Affordable Care Act – was fully paid-for. Unfortunately, today’s legislation repeals three of the ACA’s biggest revenue-raising provisions: a tax 2.3% excise tax on medical devices, a tax on the sales of health-insurance providers, and a 40% excise tax on the most-expensive “Cadillac” health insurance plans. Had these three provisions been removed from the bill prior to its passage, the non-partisan Congressional Budget Office would have scored the ACA as increasing the deficit. Today’s move gifts Republicans another line of attack in their perennial push to undermine the law and its expansion of health-insurance coverage to 14 million Americans. In addition to losing $200 billion of revenue over the next decade, repeal of the Cadillac Tax – a move which was opposed by nearly 100 health economists and policy experts in both parties – will almost certainly increase the cost of health care and reduce wage growth over the long term.
Nice: Improving Retirement Security
In May, the House passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act on an overwhelming 417-3 vote. The bill included a number of major reforms that would enhance retirement security in the United States, such as opening up 401(k) plans to part-time workers, allowing 401(k) plans to offer lifetime income options, and giving retirees more flexibility in how they choose to contribute to or draw down savings over their lifetime. The SECURE Act had stalled in the Senate but now looks certain to become law as part of the government funding legislation. Also included in the funding bills is a bailout of pension and health-care benefits for 100,000 coal miners and retirees.
Nice: Strengthening National Security
At a time when President Trump is trying to undermine the 2020 elections, the funding bill appropriates $425 million to help states improve their election systems – a $45 million increase over 2018 levels. Federal military and civilian employees will both receive a 3.1% average pay increase, which is the largest raise they’ve been given since before the financial crisis. The House also rejected an effort by the administration to backfill money it stole from military construction projects earlier this year to fund its wasteful wall on our southern border, hopefully deterring Trump from making a similar attempt in 2020. The funding bills did, however, include $1.4 billion for the construction of physical barriers.
Naughty: Charging $670 Billion to the National Credit Card
Altogether, Congress’s Christmas-tree legislation will cost another half-trillion dollars over the next decade on top of the $169 billion increase in appropriated spending agreed to in the July budget agreement. Upon retaking the House majority earlier this year, Democrats adopted pay-as-you-go (PAYGO) rules that would require this cost to be offset so as not to increase the federal budget deficit (which is already over $1 trillion and currently stands as the highest in the developed world). But the bills waived PAYGO, allowing the entirety of this cost to be added to our record-high national debt.