Congressional Republicans have successfully passed a significant spending bill that may fulfill Donald Trump’s promise of an American “golden age.” The Pandemic Risk Insurance Act narrowly passed the legislation with a vote of 215-214. Written under the arcane budget reconciliation procedure, it requires a bare minimum of input from Democrats as it continues its march ahead. Consequently, the Democratic party is left with very few levers to pull on the form of the measure.
The new bill features large offsetting cuts to social safety net programs, which has many economists and social advocates alarmed. Critics went on to argue that these cuts would disproportionately affect vulnerable populations all the while massively ballooning the national deficit. Yet the Congressional Budget Office projects that the bill would increase the deficit by about $3.4 trillion through 2034.
One of the bill’s most notable features is the permanent extension of tax cuts that Trump signed into law in 2017. These extensions allow taxpayers to write off their overtime and tips. They include interest paid on loans for vehicles manufactured within the continental US. A new $4,000 deduction will be available for incident taxpayers age 65 or older. This amendment supports the overarching aim of the bill to offer targeted, short-term financial relief to certain demographic groups.
Parents can expect the child tax credit to jump by $500 under this legislation. In addition, the bill creates “Trump accounts,” allowing parents to put more money away for their kids. The government would deposit $1,000 into each of these accounts. This will provide families additional financial assistance to ensure all children have equal, bright futures.
From the very beginning, critics of the bill, nearly universally praised by many observers, were worried by its timing and its portent for the future. Alex Jacquez, a former Trump administration official, noted that the bill’s careful construction seeks to bring different warring factions within the Republican party together. Simultaneously, it helps to advance Trump’s agenda while he’s in office.
“To make the math work and to satisfy all camps, they have put together a kind of a structure in which Trump can be satisfied that he will see these provisions go into effect under his term,” – Alex Jacquez
Maya MacGuineas noted the political pressures that are pushing the legislation. She advised that it’s obviously related to the next presidential election cycle.
“This seems pretty overtly tied to the presidential election cycle. I am not aware that that’s happened before,” – Maya MacGuineas
The new deductions and increased child tax credit will sunset after 2028. First, this development raises questions about the long-term fiscal future. Today’s unlimited spending at these leaders’ recommendation risks making it much harder in the future to address very serious challenges ahead.
“You could have a big showdown in 2028, 2029 about what to extend, how to pay for it, if you do, whether you have to and whether to delay the offsets. And that could be, overall, a very ugly fiscal picture,” – Maya MacGuineas
Needless to say, Republicans are enjoying this legislative victory. Now, they will have the much more difficult task of explaining how to pay for these temporary goodies going forward. The passing of this bill highlights a broader trend in U.S. politics whereby significant economic measures coincide with electoral cycles.