Will the CBO change its score for ACA repeal? The Senate’s GOP leadership is pushing the Congressional Budget Office to revise its score of the Better Care Reconciliation Act. Under instructions from House GOP leaders, CBO relied on enrollment data from March 2016, since that’s the baseline it used for the budget. Now, the Senate wants CBO to use more recent data. It is not clear if the updated baseline would make much difference.
CBO updates its budget estimates. Whatever happens to federal health and tax law, the debates will occur in an environment of big deficits. On Friday, CBO estimated the 2017 deficit at $693 billion, $134 billion more than it projected in January. Revenues were $89 billion lower than forecast and spending was up $45 billion. CBO projects economic growth over the next decade at about 1.9 percent.
A tax reform ultimatum? The news service Axios reports that National Economic Council director Gary Cohn is telling associates “if tax reform doesn’t get done this year it’s probably never going to happen.” And if he concludes tax reform is dead, Axios reports he may leave his post. Cohn and Treasury Secretary Steven Mnuchin now want to cut the corporate tax rate from 35 percent to 15 percent seem less interested in revenue neutrality. The same article reports that White House adviser Stephen Bannon wants to raise tax rates on high income individuals to pay for a middle-income tax cut.
Illinois gridlock continues a long and depressing trend. Over the holiday weekend, the Democratic-led House passed a budget that would change taxes by $5 billion. The package would raise the personal income tax rate from 3.75 percent to 4.95 percent and the corporate tax rate from 5.25 percent to 7 percent and fund a full-year budget and start paying down the state’s $15 billion deficit. But GOP Governor Bruce Rauner vetoed it. The Senate voted immediately to override his veto, and the measure now goes to the House. It may have been the Fourth of July in most of the US but in Springfield it was Groundhog Day.
Why isn’t Pennsylvania taxing oil extraction? Rachel Hampton and Barry Rabe of the University of Michigan consider the question. Pennsylvania does assess a modest “impact fee,” but has not adopted a severance tax out of fear the hydraulic fracturing industry will relocate. Without the tax, Pennsylvania foregoes significant revenue. Meanwhile, 38 other states tax resource extraction.
Congress is in recess this week in observance of Independence Day. The Daily Deduction will return to its regular schedule on Monday, July 10.
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