Committee for a Responsible Federal Budget

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Dec 9, 2015|The Washington Post

Why The Government Probably Isn't Going to Shut Down This Weekend (We Think)

When we last left you in this series, congressional budget experts told The Fix that the government looked more likely than not to shut down over partisan bickering at midnight Oct. 1.

But Speaker John Boehner (R-Ohio) changed all that when he suddenly announced his resignation, taking the wind out of the sails of conservatives who threatened to oust him if he didn't agree with their demands.

On his way out the door, Boehner worked mostly with congressional Democrats and the White House to pass a two-year budget deal that also raised the debt ceiling into 2017. Then Congress elected a new speaker, Rep. Paul D. Ryan (R-Wis.), and gave itself until midnight Friday to put actual dollars to that budget framework.

Attempting to pass that spending bill this week is Congress's latest challenge. And, so, we're arguably right back where we started in September: on shutdown watch.

The political dynamics that led experts to predict a shutdown this fall haven't substantially changed. Ryan faces the same pressures from conservative lawmakers and Democrats as Boehner did. Lawmakers on both sides of the aisle would love to use the spending bill to send political messages, including: No funding of the agency that handles refugees until the Obama administration can confirm that its process for vetting Syrian refugees is safe. Limit the Environmental Protection Agency's efforts to control greenhouse gas emissions. Whether to lift the ban on U.S. oil exports.

Even  cutting off funds for Planned Parenthood, the women's health nonprofit that was the subject of antiabortion advocates' ire this summer, could be in the mix.

All of that said, this time around, our congressional budget experts think the dynamics are just different enough that these lawmakers' demands are unlikely to stop the spending bill process. At the same time, no one knows for certain what will happen.

Even so, our experts are betting that the government is more likely than not to stay open as Friday turns to Saturday. Here's why:

(Ed. note: The Fix will be on shutdown watch until some kind of deal is passed. If any of our experts' predictions change, we'll update this post, so bookmark it!)

Congress is first passing a short-term spending deal

Normally, this would be a bad sign. Congress practically lives on short-term spending bills, which carry over last year's budget to next year's. It's how they got to Friday's deadline, and it's what Ryan said Congress will need to pass by Friday instead of a two-year deal.

But this time, falling back again on a short-term bill could actually be a good sign, says Molly Reynolds, a governance expert at the Brookings Institution.

She thinks it means lawmakers are actually close to a long-term deal and just need a little more time.

In asking for more time-- Dec. 16 is the latest deadline -- they are signaling that a deal that has enough support to pass Congress and get President Obama's signature is imminent. That also has the potential effect of tamping down on some lawmakers' efforts to champion issues that could cause a shutdown: Why pick up a fight you know you're going to lose?

"I take this as a sign they're getting closer," Reynolds said. "There just might be some hang-ups."

Worst case in this scenario, says budget expert Stan Collender: Lawmakers don't have a deal by Friday but think they can get it done over the weekend, so they decide not to pass a short-term spending bill and effectively create a shutdown Saturday and Sunday. But even then, "the only people who would notice are those going to a national park," Collender says.

This spending bill debate is between Republicans and Democrats and not an intra-GOP fight

The sticking points that are holding up negotiators this week are unlikely to resemble some of the intraparty fights that have caused or threatened to cause a government shutdown in the past.

That's because some issues — such as whether to raise the debt ceiling or how to deal with arbitrary spending cuts that grew out of a 2011 "fiscal cliff" — are already settled in the budget blueprint Congress passed in late October.

Theoretically speaking* (see caveat below), all that's left for Congress to do is allocate dollars to the mission statements laid out in the budget.

There's a strong chance that conservatives won't be happy with what negotiators come up with: The budget on which the spending bill will be modeled was passed in the House with 187 Democrats and just 79 Republicans.

But party leaders know this, and they're working to ensure that what they come up with can get enough support from Democrats to carry the bill; in order words, they're trying to strike a good, old-fashioned bipartisan compromise.

If that happens, those lawmakers unhappy with the spending bill don't have a ton of tools at their disposal to stop it — except to start the whole process over again by trying to oust another speaker.

Our experts don't think conservatives are up to that this time around; they say there's enough goodwill among Republicans for their new speaker to let him try to pass a spending bill, even if it is supported mostly by Democrats.

Republican leaders really don't want a shutdown

Two budget experts The Fix spoke to said 2016 is weighing heavily on congressional Republicans' minds. The presidential election is just 11 months away, and the party's dream of being able to take back the White House after eight long years in the dark is within sight.

Right now, the issues being debated on the national stage — national security and terrorism — tend to favor Republicans. Why mess that up with a scene-stealing government shutdown under Republicans' watch?

"Republicans know they will own a shutdown," said former top Senate Democratic aide Jim Manley, "and that doing so will divert attention from Obama and his failed ISIS policies – their words not mine."

"Republicans have finally learned something," said Steve Bell, a former top Senate Republican aide and the director of economic policy at the Bipartisan Policy Center. "Shutting down the government is not good for their chances."

Ryan and Senate Majority Leader Mitch McConnell (R-Ky.) are hoping the rest of their party see the long game and get in line to pass this spending bill. Or at least not try to stop it.

But …

As always, we end any attempts to predict what's going to happen in Congress with a giant caveat.

And that is that anything could happen — any issue could suddenly become the issue and rally enough lawmakers to stop the entire carefully negotiated process in its tracks. (Few predicted refugee resettlement — once a nonpartisan budget item — would be as big an issue as it is today, for example.)

"The differences – and there are many – are about riders not money," said Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget. (Riders is D.C. speak for political issues like Planned Parenthood or Syrian refugees; policy proposals lawmakers want to add onto the spending bill to limit or dictate spending on these particular issues.)

Congressional leaders might well be close to producing an agreement that enough lawmakers can live with to keep the government open.

But they can't control what forces will suddenly shift the political debate between now and then. And that's why our experts say a government shutdown this week is unlikely — but can't be ruled out entirely.

Dec 9, 2015|Washington Examiner

Bush Tax Plan Would Add 50 Percent to Federal Debt

 Jeb Bush's plans for tax cuts would add 50 percent to the federal debt over a decade, according to an analysis published Tuesday by an influential Washington research organization.

The Tax Policy Center, a nonprofit think tank, estimated that the former Florida governor would cut taxes for everyone, including by an average of $800,000 for the top 0.1 percent of earners, if he succeeds in his Republican presidential bid.

Bush's plan is to lower individual and corporate tax rates and make up some of the lost revenue by eliminating loopholes, credits and other tax breaks. But the revenue-raising provisions would fall far short of making up the difference, by $6.8 trillion over 10 years, according to the Tax Policy Center. Including interest costs on the new debt, that would amount to more like $8 trillion. The current debt is $18.8 trillion.

"If you were thinking about designing a plan that would embody all of the supply-side elements you could imagine, this plans embodies that pretty well," said Len Burman, an analyst at the Tax Policy Center.

"The big issue with the plan is that it loses a whole lot of revenues," Burman said, explaining that it would be unlikely, politically, that the plan could be adopted as written, even though it represented a "serious tax reform."

Bush campaign representative Allie Brandenburger responded with criticism of Burman's organization. "Given its history of opposing pro-growth tax policies, it is no surprise the liberal Tax Policy Center is misrepresenting Jeb's plan to create 4 percent growth," Brandenburger emailed the Examiner. "Jeb is the only candidate in this race on either side of the aisle who has put forward a serious and substantive plan to overhaul the broken U.S. tax code to help create 19 million new jobs, raise wages and restore opportunity for Americans across the board, and balance the federal budget with a balanced budget amendment."

The Tax Policy Center's estimate of the loss of tax revenue from Bush's tax cuts is roughly twice as large as estimates from the campaign and from the Tax Foundation, another Washington think thank that is more to the right of center.

The Tax Policy Center analysis doesn't include the potential for greater revenues that would come if the tax plan accelerated economic growth. On a call with reporters, Burman said it was not clear if the plan would yield greater economic growth. While lower tax rates and a simplified tax system would be conducive to growth, the added federal debt would lower growth by driving up interest rates and "crowding out" private investment.

Bush has said that his tax cuts would be paired with spending cuts. But an analysis of his entitlement spending reform plans from the Committee for a Responsible Federal Budget placed the total 10-year savings at just $285 billion, far short of the lost tax revenue. Bush currently ranks fifth in the Washington Examiner'presidential power rankings.

Bush's plan would cut the top marginal tax rate from 39.6 percent to 28 percent and the top corporate tax rate from 35 percent to 20 percent. He would lower the tax burden on lower-income families by cutting lower tax rates and nearly doubling the standard deduction. He also would allow businesses to immediately write off investments, and he would eliminate the estate tax.

The result of all those changes is that the average taxpayer would see taxes drop by $2,813. While the bottom fifth of income earners would see their incomes rise 1.4 percent, or $184, the benefits of Bush's plan would increase as income rises. The top 0.1 percent would get a 12 percent boost in take-home pay, or more than $800,000.

The analysis is the first performed by the Tax Policy Center, which says it plans to perform similar analyses for other candidates. The analysis for the plan of Donald Trump, currently atop the polls among GOP candidates, would likely show even greater revenue losses as his plan is similar to Bush's but with lower tax rates. Trump currently ranks second in the Examiner's power rankings.

The organization's score of Mitt Romney's tax plan in 2012 helped provide President Obama with a talking point against the Republican former Massachusetts governor. That analysis found that Romney's tax rate cuts would expand the deficit unless taxes rose for the middle class, a finding that the Obama campaign seized on to accuse Romney of catering to the wealthy.

The model used in the analysis is based on a file of 136,000 tax returns provided by the Internal Revenue Service, the Tax Policy Center said. The group, which includes a number of former staffers for government agencies that performed similar tax analyses, has used and refined the model since 2001.


Dec 9, 2015|Crain's NY Business

Rangel, Lone NY Voice Against 'Terrible' Tax Bill, Blasts Colleagues for Picking at 'Crumbs'

 Members of Congress will be home for the holidays, but not before they decorate a Christmas tree with a massive assemblage of tax breaks.

Rep. Charlie Rangel says humbug.

The dean of the New York delegation told Crain's he is "damn sure" he will vote against the package and that his fellow Democrats are settling for “crumbs.”

The cuts were billed as temporary when they first passed in 1988. But the tax-extender legislation has become a Washington tradition that seems to get costlier when renewed every year or two. The latest price tag is more than $700 billion (with a B) over 10 years.

This year’s bill, not yet finalized, could make some of the tax breaks permanent, such as one for research and development that will cost the Treasury $80 billion in the next decade, according to the watchdog Committee for a Responsible Federal Budget.

Most of the city’s representatives in Washington expect to support the package if it includes permanent benefits for poor families, such as the earned-income tax credit, while their counterparts across the aisle get big tax breaks for business.

"The minority should say, 'I'm not going to have that blood on my hands, dammit,'” Rangel said. “Don't count me in. Take out the EITC, take out the child tax credit. These are crumbs compared to what this bill is going to cost.”

Among the city's delegation, all of whom are Democrats except for Daniel Donovan of Staten Island, Rangel is alone in his outright rejection of the plan, according to a Crain’s survey answered by all but three members. Rep. Hakeem Jeffries of Brooklyn said he would not support the bill if it leaves “our most vulnerable communities behind.”

But Rangel said Democrats who support the cuts are falling into a Republican majority's trap to reduce federal revenue.

"This tax package is really obscene, and while people are negotiating for low-income people's credit, what the Republicans are really doing is 'starving the beast' by $700, $800 billion,” Rangel said. “Which means when it comes to discretionary spending, there won't be any money there."

"I don't know why the minority should help the majority to pass this terrible, terrible, terrible, terrible tax bill," he added.

Dec 9, 2015|Cedar Rapids Gazette LTE (IA)

Candidates Should Address National Debt

 To the editor:

A few weeks ago I attended an event in Des Moines hosted by POLITICO which brought together community leaders to discuss how economic issues will impact the 2016 Iowa caucuses and presidential election. The event touched on some of the nation’s most important economic issues, including the national debt.

I believe our more than $18 trillion national debt is the most important economic issue facing the nation. The national debt is large and growing and could lead to higher mortgage rates, higher interest rates, and less economic growth. This event was important to help foster discussion on this critical issue, and reinforces the efforts of initiatives like First Budget — a joint effort of the Concord Coalition and the Campaign to Fix the Debt that is raising awareness of the national debt and making solving this problem a high priority for the 2016 presidential candidates. It is essential that Iowans continue to press candidates and ask them to come up with realistic solutions and specific plans to solve important issues like the national debt.

Kim Reem


Dec 8, 2015|Bloomberg View

Paying for Hillary's Tax-Credit-Palooza

 In past presidential elections, candidates hoped to convince voters of their fiscal rectitude. This time, though, fiscal responsibility is out. Tax giveaways are in. 

This puts Hillary Clinton in a straitjacket. She has proposed about $1 trillion in new government spending -- much of it through the tax code. But unlike the Republican candidates, she doesn't claim that tax breaks lead to higher growth and thus pay for themselves. So she's under pressure to show how she'd pay for all the tax credits she is proposing. 

Not only are the Republican candidates offering more generous tax breaks on everything from estates to investment returns. They aren’t even pretending to honor the concept of budget neutrality -- that is, they haven’t identified spending reductions or tax increases elsewhere to offset all the tax cuts they are proposing. 


The Committee for a Responsible Federal Budget, a nonpartisan think tank, has an infographic showing that the seven GOP candidates with tax-cut plans, using conventional scoring, would add a total of $42 trillion to federal deficits over 10 years. 

This election’s sole fiscal hawk, Ohio Governor John Kasich, is finding out the hard way that fiscal probity is out. He's making little headway with his old-fashioned call for a balanced budget and warnings about his rivals' "fantasy tax plans." 

The new outlook is also haunting Clinton, who has targeted one interest group after another with tax-relief gifts. The most recent example: up to $1,200 in credits to reimburse family members for the cost of caring for aging parents. (Say thanks, baby boomers.) That followed an offer of up to $2,500 in tax credits for out-of-pocket health-care costs. (This one's for you, millennials.) 

And those followed her proposals for making college more affordable, including making permanent a generous tax credit for college tuition and other expenses that began under the 2009 stimulus law. The package's price tag: $350 billion over 10 years. 

Clinton also would provide tax credits to help working parents pay for child care. Low-income homeowners who install solar panels would be eligible for a break, as would investors in low-income urban areas. 

For companies, she would provide $1,500 tax credits for each apprentice hired, and an expansion of an existing job credit if businesses hire ex-felons and other marginalized people. She would reward companies with profit-sharing plans with a 15 percent tax credit on the value of bonuses paid out. 

The list goes on. It's so lengthy that Clinton opens herself to charges of mucking up an already over-complicated tax system. Besides, the government already offers a wide array of means-tested grants and loans for college; why is it necessary to use back-door spending to subsidize higher education even more? 

Clinton was not going to forget Big Labor. She offers a tax credit that encourages infrastructure spending, which would provide jobs to union workers. She salami-slices the whole Democratic base -- boomers with aging parents; millennials with college loans; homeowners with costly mortgages; and minorities living in under-served urban areas. Each would get a generous credit. 

She vows to pay for it all, but so far hasn't said exactly how. 

Months ago, Clinton suggested limiting the value of tax deductions for well-off taxpayers, similar to a plan President Barack Obama has offered for several years but that Congress has never seen fit to take up. Obama's plan would cap at 28 percent the value of deductions -- for charitable contributions, payment of state taxes and the like -- that itemizers use to lower their tax bills. If Clinton offered the same idea, she could claim to have "saved" $525 billion over 10 years, which is the score given by Congress's Joint Committee on Taxation. 

Even then, she needs to find about $500 billion in savings to pay for the rest of her free stuff. That's the price of claiming to be fiscally responsible. It's also the price of playing interest-group politics.

Dec 8, 2015|PBS NewsHour (Video)

$300 Billion Transportation Funding Law Approved By Congress

No description is available.

Dec 8, 2015|Money Morning

This New Tax Deal Will Tack $700 Billion onto the National Debt

There's a new tax deal being debated in Congress right now, and it comes with a 10-year price tag of about $700 billion in foregone revenue.

You see, for every tax break that is passed, the budget deficit balloons in order to "finance" that lost revenue.

The new tax deal being debated in Congress comes with a 10-year price tag of about $700 billion. Here's how it's going to make national debt balloon...And this new tax package would extend approximately 50 temporary tax breaks that have either expired or will soon lapse. By combining Republican business breaks with Democratic tax credits for lower-income workers and families, representatives are hoping the new legislation will escape the common partisan roadblocks for which Congress has become notorious.

As it looks right now, the deal will likely pass before Congress breaks for the year.

While it's nice to see everyone at last getting along, we're a little worried about the $700 billion budget deficit…

One Senate aide initially projected the package would cost $500 billion over 10 years, reported The Hillearlier today. But a House aide later set the price tag closer to somewhere between $700 and 800 billion over 10 years, reported The New York Times this morning.

Since the deficit has been falling for six consecutive years – from $1.4 trillion in 2009 to $439 billion in 2015 – this $300 billion discrepancy is also a little worrisome. The centrist group Committee for a Responsible Federal Budget has called the emerging package "a fiscally irresponsible bipartisan deal," reported The New York Times on Friday.

So let's have a look at what makes the new tax deal so expensive…

The New Tax Deal Is Pricey Thanks to These 3 Core Provisions

Democrats are pushing for stimulus-era expansions of the Earned Income Tax Credit (EIC) and the Child Tax Credit (CTC), which are scheduled to expire at the end of 2017. They would like to:

  • Decrease the threshold at which someone can claim the refundable portion of the child credit.
  • Expand the maximum Earned Income Tax Credit available to families with at least three children.

Combined, these provisions would cost $100 billion, according to U.S. Treasury estimates.

Democrats' demands aren't stopping there. Part of their new tax deal agenda includes indexing the child credit for inflation. This means that as inflation rises, so does the amount you and I claim for our children.

"If we don't [raise the child credit], within four years or so, 700,000 children fall back into poverty," said Sen. Sherrod Brown (D-OH), a member of the tax-writing Finance Committee.

For their part, Republicans are worried about oversight of fraud with both the EIC and the CTC. So part of what is being negotiated is significant improvements to the programs' verification process – though specifics haven't been given.

The Republicans are also responsible for the new tax deal's costliest provision…

Dec 8, 2015|WSJ Washington Wire

To Keep Expiring Tax Cuts, Congress Considers Another Borrowing Bonanza

Congress is contemplating massive borrowing for a year-end bonanza that would make permanent a number of expiring tax cuts. The price tag? $700 billion over the next decade. And this is on top of a year in which Congress already added $245 billion to the debt.

How do we explain to our children that we borrowed more than $1 trillion—counting interest—not because it was a national emergency or to make critical investments in the future but because we just don’t like paying our bills? Oops?

The U.S. fiscal picture doesn’t justify carefree borrowing. The Obama administration likes to emphasize thatdeficits have narrowed, but this year’s deficit is still more than $400 billion. And the deficit is projected to start growing again, quickly, in two years. The national debt is a whopping 74% of the U.S. economy–the highest level it has been other than during World War II and twice the historical average

Yet in the past few years, Congress has borrowed for business tax breaks, highway spending, higher payments to doctors in Medicare, and more

When it came to fixing the “doc fix,” plenty of options to pay for the change were available, such as modernizing Medicare’s cost-sharing structure and reducing overpayments to hospitals and nursing homes. Instead, lawmakers ignored two-thirds of the bill’s price tag and expanded the debt by $140 billion this decade. The sequester relief deal? More gimmicks and a $50 billion price tag. Last week’s bailout of the highway trust fund tacked on an additional $50 billion by resorting to gimmicks, instead of increasing the gas tax or otherwise aligning transportation spending and revenue

And now, tax cuts. Most of the extensions under consideration are sensible enough policy–and their merit is an argument for paying for them. There are plenty of options: closing egregious loopholes such as carried interest, improving tax compliance, all-out tax reform. If lawmakers need a little extra time (even though this deadline has been known for a full year), Congress could extend the tax breaks for one year while developing a comprehensive plan to reform the tax code

All this borrowing chips away at the progress Congress and the president made with their recent mini-budget deals. While far from ideal—the “fiscal cliff” deal that saved $800 billion relied on increasing tax rates instead of reforming the tax code, and the sequester that saved $900 billion focused almost entirely on the discretionary portion of the budget when the problems lie in mandatory spending—it took quite a lot to get even those deals done. Now Congress is poised to give back the bulk of that progress. Instead of building on those small steps to get control of the debt, we would backslide

Achieving bipartisan agreement on paying for things is difficult enough when Republicans favor spending cuts and entitlement reform and Democrats favor tax increases. But the current situation is worse than the usual reluctance to compromise

This year, Republicans agreed to increase discretionary spending by $110 billion but paid for only half that amount. In the 11 months they have controlled Congress, Republicans haven’t passed any significant stand-alone entitlement reforms to reduce spending. They just joined with Democrats to repeal one of the few entitlement changes that had been made, to crop insurance

Meanwhile, Democrats argue that we need new revenues yet are standing behind this plan to cut taxes by $700 billion. Sixty percent of that would go to businesses. Why would they support borrowing for corporate tax cuts over help for, say, and critical new public investments?

As the election approaches, a big budget deal is almost surely out of reach. But surely lawmakers on both side of the aisle could do more than continue to duck hard choices and add to the debt like it will never come due.


Dec 7, 2015|Washington Examiner

Congress Contemplating Massive Deficit-Finance

 Congressional negotiators are working on a deal to pass tax breaks that could end up being the biggest legislative addition to the deficit since President Obama's 2009 stimulus.

The negotiations concern a package of potentially dozens of tax breaks for corporations and families. The final mix of tax breaks will be determined by bargaining between congressional Democrats and Republicans and the White House.

Some of the key players, however, have been suggesting that they're working toward a larger bill. "There is a growing appetite to find a substantial and balanced deal," Oregon's Ron Wyden, the ranking Democrat on the Senate Finance Committee, said Thursday.

The package is a grab bag of temporary tax provisions that have expired and that, for the most part, are regularly re-upped each time they expire. For that reason, they're known as "extenders." Most of them ran out at the beginning of this year and won't be available for taxpayers unless they are reinstituted before the year ends.

The bargain could make certain provisions permanent, rather than temporary, which lawmakers have long sought to do with the biggest and most familiar breaks to provide certainty.

But, on paper, the cost would be high. The Committee for a Responsible Federal Budget, a nonprofit group that advocates lowering the federal debt, estimated this week that one possible version of the permanent tax breaks package would cost the Treasury up to $840 billion over 10 years, when interest on the associated debt is taken into account.

That's only on paper, however. Many lawmakers in both parties have chosen to ignore the stated budgetary costs of extending the breaks. The logic for that is they are reinstated every year, so they should be considered the same as permanent tax breaks in the tax code, such as the mortgage interest deduction. That popular tax break loses money for the government every year, but Congress doesn't cut spending or raise taxes to make up the difference.

Rep. Paul Ryan laid out that argument on the House floor in February, back when, as chairman of the House Ways and Means Committee, he was shepherding a permanent extension of charitable tax credit extenders.

"This isn't costing anything, in that we are not lowering someone's taxes. We are just keeping their taxes where they are, and we are preventing them from going up," the Wisconsin Republican said when Democrats criticized GOP lawmakers for adding to the deficit.

"We don't hear all these hues and cries about the deficits when we extend these tax provisions for two years. We don't hear these concerns when we extend current law tax provisions for one year. And we don't hear these concerns about deficits when we retroactively extend it from last year, going forward," Ryan also said. "We only hear these concerns when we are giving people the certainty."

Congress did pass a one-year re-extension of a broad package of extenders late last year, just before the deadline for companies and individuals to claim them on their tax returns.

Marc Goldwein, a senior vice president at the Committee for a Responsible Federal Budget, disagrees with Ryan's logic and believes that the extenders should be offset, he told the Washington Examiner.

But granting that some extenders, such as the research tax break for businesses that has been extended 16 times since 1981, really should be considered part of the baseline, much of what's in consideration should not be.

In Goldwein's estimation, lawmakers are discussing as much as $200 billion in tax breaks that have not been part of current policy until now. That would be enough, Goldwein noted, to provide relief from the sequestration automatic spending cuts for two years, or to cut the corporate tax rate from its current 35 percent to under 30 percent.

One example is a version of the research tax credit that the House passed earlier this year, which included an expansion of the tax credit that doesn't exist currently and would cost an additional $73 billion over 10 years.

Another is one of Democrats' top asks, namely that the Child Tax Credit, which provides $1,000 for child, be indexed for inflation. Currently, rising prices eat into the real value of the credit each year.

Including that measure would add another $73 billion to deficits, according to the Committee for a Responsible Federal Budget.

One example is a version of the research tax credit that the House passed earlier this year, which included an expansion of the tax credit that doesn't exist currently and would cost an additional $73 billion over 10 years.

Another is one of Democrats' top asks, namely that the Child Tax Credit, which provides $1,000 for child, be indexed for inflation. Currently, rising prices eat into the real value of the credit each year.

Including that measure would add another $73 billion to deficits, according to the Committee for a Responsible Federal Budget.

The Child Tax Credit provision is one that could generate added pushback from conservatives.

Part of the Child Tax Credit is refundable, meaning that if the credit exceeds a filer's tax liability, the government will write them a check. Dan Holler, a representative for the conservative group Heritage Action, said "the concerns that we have are when you start talking about the refundable tax credits in there, because that's essentially spending."

His group, he said, is not concerned about revenue lost from cutting taxes on businesses or individuals. "If it's an actual tax cut, then that's good," he said.


Dec 7, 2015|WSJ Washington Wire

Clinton Hedges on Tax-Cut Plan

 Former Secretary of State Hillary Clinton has promised to lower–and not raise–taxes on middle-class Americans, but Sunday she sidestepped a question about whether she would make an iron clad promise not to raise them on people earning less than $250,000 a year.

The front-runner for the Democratic presidential nomination has made middle-class tax breaks a key plank of her domestic agenda, but in an interview with ABC’s “This Week,” she would not commit to a no-new-tax pledge for roughly 97% of wage earners, though she said not raising them on those households “is certainly my goal.”

Republicans and some outside observers have questioned whether Mrs. Clinton can pay for a series of business and middle-class tax cuts, as well as her domestic spending priorities, simply by raising revenue on the wealthiest Americans. Mrs. Clinton has proposed $1 trillion in new spending over the next decade.

Mrs. Clinton wants to expand access to preschool and child-care, make college more affordable and spend roughly $275 billion on roads and other transportation projects. The infrastructure projects would be paid for by changes in the business tax code. She has pledged to raise the necessary revenue from the top 3% of wage earners.

“I have been very specific about how I will pay for each of those,” Mrs. Clinton said on ABC’s “This Week”, noting all the Republican proposals to cut taxes for higher earners that would add to the deficit.

Mrs. Clinton’s focus on lowering taxes creates an implied contrast with her top rival for the Democratic nomination, Vermont Sen. Bernie Sanders, who has called for universal, government-run health care, among other expansions of federal programs. The health-care plan alone could cost roughly $15 trillion over the next decade, requiring new revenue streams. Clinton officials have hinted his presidency would result in new taxes for the middle class.

On Sunday, Mrs. Clinton emphasized her commitment to lowering middle-class taxes, but she also pledged to offset any lost revenue or additional spending in order to prevent the deficit from swelling. The Committee for a Responsible Federal Budget issued a recent report that says Mrs. Clinton has already proposed nearly $1 trillion in new revenue, including a plan to limit deductions for the wealthiest Americans.

“I do come from the Clinton school of economics, and when my husband ended, we had a balanced budget and a surplus,” Mrs. Clinton said Sunday during an interview on ABC’. “It’s is going to take good fiscal responsibility. That’s what I’m promising. But I’m also promising that the wealthy are going to start paying more for their fair share and help to fund some of these investments.”