OfTheCross
Veteran
Reported Spending Package Could Add Almost $500 Billion to Debt
As lawmakers quickly approach the December 21 deadline for government funding, they are eyeing a deal to cut taxes and add nearly $500 billion to the debt over the next decade.
The reported deal would include permanent repeals of the Affordable Care Act's (ACA or "Obamacare") three oft-postponed taxes – the "Cadillac tax" on high-cost health insurance plans, the tax on health insurers, and the medical device tax – at a combined cost of almost $400 billion over a decade. Adding in the temporary extension through 2020 of already-expired or soon-to-expire tax policies, often referred to as "tax extenders" (or "zombie" extenders because they just won't die), the total package could result in $470 billion of additional debt over the next decade, including interest.
Policy Ten-Year Cost
Permanently Repeal Cadillac Tax $200 billion
Permanently Repeal Medical Device Tax $25 billion
Permanently Repeal Health Insurer Tax $165 billion
Extend Expired and Soon-to-Expire Tax Extenders through 2020 $35 billion
Subtotal $420 billion
Interest $50 billion
Total $470 billion
Source: CRFB calculations based on Congressional Budget Office data. Note: numbers may not add due to rounding.
This additional debt would be on top of the massive spending increase lawmakers passed this summer, lifting the caps on discretionary spending by $320 billion over the next two years and setting up $1.7 trillion in debt over the next decade. At the time, policymakers justified such a large increase as being necessary to ensure easy package of appropriations bills; yet, nearly three months into the fiscal year, lawmakers have been operating on stop-gap continuing resolutions for government funding. Furthermore, nearly 100 economists and health experts agree that the Cadillac tax shouldn't be repealed without a proper replacement, and a coalition of 12 groups spanning across the ideological spectrum agree that tax extenders should be ended once and for all.
As Committee for a Responsible Federal Budget president Maya MacGuineas put it:
Congress and the President must pursue a clean appropriations process, free of gimmicks and unnecessary add-ons. If any tax cuts or spending increases are included in a year-end spending bill, they should be offset under PAYGO rules and not allowed to further burden our kids and grandkids.
If repealing these taxes and putting in place temporary cuts are necessary, lawmakers need to pay for them. They can look to examples of paying for priorities, like in a new bill from Senators Michael Bennet (D-CO) and Mitt Romney (R-UT), as a guide for how policymaking should be done: assessing priorities, evaluating tradeoffs, and paying for them rather than sticking the cost to future generations. We urge lawmakers to reject this $500 billion debt increase.
As lawmakers quickly approach the December 21 deadline for government funding, they are eyeing a deal to cut taxes and add nearly $500 billion to the debt over the next decade.
The reported deal would include permanent repeals of the Affordable Care Act's (ACA or "Obamacare") three oft-postponed taxes – the "Cadillac tax" on high-cost health insurance plans, the tax on health insurers, and the medical device tax – at a combined cost of almost $400 billion over a decade. Adding in the temporary extension through 2020 of already-expired or soon-to-expire tax policies, often referred to as "tax extenders" (or "zombie" extenders because they just won't die), the total package could result in $470 billion of additional debt over the next decade, including interest.
Policy Ten-Year Cost
Permanently Repeal Cadillac Tax $200 billion
Permanently Repeal Medical Device Tax $25 billion
Permanently Repeal Health Insurer Tax $165 billion
Extend Expired and Soon-to-Expire Tax Extenders through 2020 $35 billion
Subtotal $420 billion
Interest $50 billion
Total $470 billion
Source: CRFB calculations based on Congressional Budget Office data. Note: numbers may not add due to rounding.
This additional debt would be on top of the massive spending increase lawmakers passed this summer, lifting the caps on discretionary spending by $320 billion over the next two years and setting up $1.7 trillion in debt over the next decade. At the time, policymakers justified such a large increase as being necessary to ensure easy package of appropriations bills; yet, nearly three months into the fiscal year, lawmakers have been operating on stop-gap continuing resolutions for government funding. Furthermore, nearly 100 economists and health experts agree that the Cadillac tax shouldn't be repealed without a proper replacement, and a coalition of 12 groups spanning across the ideological spectrum agree that tax extenders should be ended once and for all.
As Committee for a Responsible Federal Budget president Maya MacGuineas put it:
Congress and the President must pursue a clean appropriations process, free of gimmicks and unnecessary add-ons. If any tax cuts or spending increases are included in a year-end spending bill, they should be offset under PAYGO rules and not allowed to further burden our kids and grandkids.
If repealing these taxes and putting in place temporary cuts are necessary, lawmakers need to pay for them. They can look to examples of paying for priorities, like in a new bill from Senators Michael Bennet (D-CO) and Mitt Romney (R-UT), as a guide for how policymaking should be done: assessing priorities, evaluating tradeoffs, and paying for them rather than sticking the cost to future generations. We urge lawmakers to reject this $500 billion debt increase.
