Another vote on another spending bill to avert another shutdown. The House voted last night on a stop-gap measure to fund the military through Sept. 30 and most of the rest of the government only through March 23. Senate leaders, meanwhile, are nearing a two-year budget deal that would set spending levels for both domestic and military spending for 2018 and 2019. President Trump didn’t make a deal any easier when he weighed in, saying “I’d love to see” a government shutdown if there’s no deal on border security and immigration.
The Trump Administration says “don’t worry about the market.” Council of Economic Advisers Chairman Kevin Hassett is confident that Americans will invest their tax cuts in the stock market. He insists that the tax cuts won’t overheat the economy and cause inflation. The White House has sometimes argued that consumers would spend their tax cuts, boosting short-term demand. Treasury Secretary Steven Mnuchin told the Senate Banking Committee yesterday that the stock market is “functioning very well” and that we’ve “seen a normal market correction, although large.”
“Starve the beast” or “pig out?” TPC’s Howard Gleckman considers a guiding principle of many conservatives: Shrink government by cutting spending… by cutting taxes. According to the starve-the-beast theory, the TCJA, which reduces revenue by over $1.5 trillion over the next decade, should prompt significant spending reductions. “But,” Howard explains, “even though Republicans control both houses of Congress and the White House, it increasingly looks like the post-TCJA federal government is growing, not shrinking.”
The White House promises an infrastructure outline on Monday. The president’s long-promised plan for repairing the nation’s roads, bridges, and the like will be released on Monday, the White House says. But a White House statement promises only “infrastructure principles, which will outline a plan that will generate at least $1.5 trillion of investment.” Sounds a bit like last spring’s one-page tax outline, which left a lot to the imagination.
IRS: The Tax Cuts and Jobs Act doesn’t affect 2018 retirement plans’ dollar limitations. The IRS announced yesterday that the TCJA didn’t change the section of tax law that limits benefits and contributions to retirement plans. The decision leaves previous IRS guidance on retirement plan and IRA contributions unchanged.
If you’d like to tell us about a new research paper or have any comments about the Daily Deduction, TPC’s summary of the day’s tax news, write Renu Zaretsky at firstname.lastname@example.org. You can sign up here to receive the Daily Deduction as an email newsletter every weekday morning (Mondays only when Congress is in recess) at 8:00 am.
Posts and Comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
- © Urban Institute, Brookings Institution, and individual authors, 2016.