Digging Deeper Into the New Budget Deal


Sunday December 20th, 2015   •   Posted by Craig Eyermann at 3:53pm PDT   •  

On Friday, December 18, 2015, President Obama signed into law the two massive spending and tax bills that the U.S. Congress passed earlier in the week. When he did, he dug the nation’s national debt hole over $1.2 trillion deeper over the next 10 years than it otherwise would have been, according to estimates by the Committee for a Responsible Federal Budget (CRFB).

Our chart below summarizes the major changes that will negatively affect the U.S. federal government’s fiscal situation over the next 10 years, from 2016 through 2025.

big-bad-budget-deal-deeper-debt-hole-2016

On the spending side, there are about $50 billion in spending increases for discretionary spending programs over the next 10 years, mostly supporting defense and transporation programs.

The biggest increase in spending however is the decision by U.S. politicians to artificially insulate Medicare beneficiaries from a major spike in their premiums for Part B health insurance coverage, where one in seven beneficaries would have seen their premiums increase by as much as 52% in 2016.

Meanwhile, the U.S. Congress continued its trend in recent years of making the “temporary” tax credits that are already part of the law permanent, rather than continuing what has become an ongoing charade where they are continually renewed whenever they are otherwise about to expire. The 2016 tax extender bill makes the current Child Tax Credit, Earned Income Credit, Opportunity education credit, and a number of corporate tax credits, such as those for Research and Development (or Experimentation) permanent.

Beyond those measures, the U.S. Congress also signed onto the “green” energy tax credits that are designed in part to keep “green” energy companies from otherwise going bankrupt.

Finally, the tax extender portion of the budget deal delays the implementation of taxes imposed by the Affordable Care Act, which is more popularly known as “ObamaCare”, for two years. In particular, the delay affects the implementation of the ACA’s “Cadillac” tax, which imposes taxes on health insurance coverage that the U.S. government defines as being too overly generous, and also the 2% excise tax on all medical devices that are sold in the United States.

The non-partisan Tax Foundation provides a good summary of the impact of these and other tax-related measures on expected future tax collections.

Curiously, the Committee for a Responsible Federal Budget is really worked up on the tax extender portion of the 2016 budget deal, but has had very little to say about the increase in Medicare spending that is the single biggest line item in the budget deal weighing down the U.S. government with debt.

But at least there’s some good news out there for the folks at the CRFB. The nonpartisan Congressional Budget Office announced on Friday, December 11, 2015 that they found that repealing the Affordable Care Act would actually reduce the nation’s deficits by $474 billion over the next 10 years, in good part by reducing the kind of tax credit subsidies that the CFRB seems to find so objectionable.




Facebook Twitter Youtube RSS

Search


By linking to Amazon.com from this page, Independent Institute earns referral fees of 4% to 15% from whatever you buy. Bookmark the above link and you can support the Institute when you do your normal shopping!

TIR
December 2015
S M T W T F S
« Nov   Jan »
 12345
6789101112
13141516171819
20212223242526
2728293031