Why There Will Be Plenty of Fiscal Fireworks in 2018

By Yuval Rosenberg and Michael Rainey Putting a Bow on 2017 President Trump signed the sweeping GOP tax bill Friday, enacting the most [significant tax overhaul]( in more than 30 years. The bill slashes the corporate tax rate and reduces individual taxes for eight years while making hundreds of changes in the tax code that are expected to reduce federal revenues by $1.5 trillion over 10 years. "It's going to be a tremendous thing for the American people. It's going to be fantastic for the economy," Trump told reporters before heading to Florida for the holidays. The president also signed a short-term funding bill passed by the House and Senate yesterday that will keep the government open until January 19, postponing what promises to be a difficult negotiation over the 2018 federal budget. The continuing resolution includes: - $2.85 billion to fund the Children's Health Insurance Program through March - $4.6 billion for missile defense programs and repairs to Navy ships - A waiver of the mandatory spending cuts triggered by the tax bill - An extension of an electronic surveillance law set to expire at the end of December The bill does not address the Deferred Action for Childhood Arrivals Program, leaving another contentious issue to be dealt with early next year. Congress will also have to revisit a disaster aid package after the Senate failed to pass $81 billion in relief funding. Two Obamacare stabilization bills will also wait until next year. Enjoy the holiday break because January — and the rest of 2018 for that matter — is going to be busy and [messy](. Trump’s Top Priority for 2018: Infrastructure or Welfare Reform? The White House has yet to finalize its top priorities for 2018, according to reports, but the administration would like to pursue infrastructure, “welfare reform,” or both. Either path would entail political risks. “What you need for infrastructure is new money, and I don’t see where they’re going to get it,” Sen. Mark Warner said Thursday at an event sponsored by Axios. And conservatives may balk at increased spending. Welfare or entitlement reform won’t attract Democratic support, and could spark a fervent backlash along the lines seen earlier this year when Republicans sought to repeal and replace Obamacare. President Trump seemed to indicate Friday that infrastructure could come first. “At some point, and for the good of the country, I predict we will start working with the Democrats in a Bipartisan fashion. Infrastructure would be a perfect place to start. After having foolishly spent $7 trillion in the Middle East, it is time to start rebuilding our country!” Trump [tweeted]( Friday morning. On entitlement reform, Trump promised during his election campaign that he would not touch Social Security or Medicare, and he has reportedly told multiple Republican members of Congress that entitlements are [off the table]( in his first term. But the White House’s 2018 budget proposed sharp cuts to food stamps, Medicaid payments, Social Security disability benefits and other programs for the poor. A welfare reform push in 2018 would likely focus more narrowly on such efforts rather than pursue the broader changes to the social safety net that House Speaker Paul Ryan has long sought. McConnell vs. Ryan Ryan earlier this month [said]( on a radio talk show that “we’re going to have to get back to entitlement reform” in 2018. But Senate Majority Leader Mitch McConnell yesterday shot down the idea of tackling welfare and entitlement reform in 2018, telling Axios that he preferred to focus on an issue like infrastructure that could draw Democratic support. The president will reportedly meet with McConnell and Ryan early next year “to make sure everyone is on the same page.” McConnell, who will lead a slim 51-seat majority in the Senate starting next year, expanded on his thinking in comments to [The Washington Post]( “I don’t think, as a practical matter in the Senate, we can do entitlement reform without bipartisan agreement,” he said. “And you can fill in the blanks. I mean, it applies to entitlements in general — Medicare, Social Security, welfare — they’re so doubled down on that, I’m not going to devote floor time to something that has no Democratic support.” He’s not the only Republican who has concerns about moving on to welfare or entitlement reform. “I think the optics are terrible,” John McKager “Mac” Stipanovich, a GOP consultant, tells the Post. “At least at this point, the Democrats are winning the argument that the tax cuts primarily benefit the wealthy and big business. To come in right behind that and start whacking the poor, the working poor, will not serve Republicans well in 2018.” Democrats are already gearing up for that fight — and likely relishing the political opportunity it presents. “Compromising programs like Medicare and Social Security – that Americans have paid into and earned through years of hard work – is irresponsible, especially after forcing through legislation that increases the deficit by $1.5 trillion,” Democrats on the House Ways and means Committee [tweeted]( yesterday. House Minority Leader Nancy Pelosi [said]( Democrats would fight against changes to Medicare, Medicaid, and Social Security. "Social Security is in reasonable shape until at least 2030-something," she said Thursday. "But nonetheless, we want that to be even longer and these are issues that can be talked about separately. But we will fight to defend them because they are about the health and economic security of America’s working families and we will not use Medicare and Medicaid and Social Security as an ATM machine for the Republicans to give tax breaks to their wealthy friends and corporate America." [Share]( [Tweet]( [Forward]( See You in 2018! We'll be back in your inbox on January 2, but you can still visit The Fiscal Times website for updates until then. As always, send your feedback by emailing Yuval Rosenberg at yrosenberg@thefiscaltimes.com and follow him on Twitter [@yuvalrosenberg](. Follow The Fiscal Times on Twitter [@TheFiscalTimes](. Another Reason the Tax Bill Was Bad for Deficit Hawks Mitch McConnell’s comments to Axios and The Washington Post on the need for Democratic support for any entitlement reform highlight another danger of the GOP’s tax plan, at least from the perspective of deficit hawks. Not only will the tax cuts add more than $1 trillion to deficits — and potentially twice that amount — over 10 years, but the Republican’s go-it-alone strategy to push through tax cuts also forecloses the possibility, at least for now, of any broader bipartisan reforms of Social Security and Medicare, the primary drivers of the U.S.’s long-term debt. “The way to get at fixing the debt is to feel like everybody is willing to put something on the table,” Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, [told The New York Times]( earlier this month. “Once you have one side grab all it could, you’re never going to have the other side show up.” McConnell and Pelosi just confirmed it. How Will the Tax Bill Affect You? Here are some useful links to see how the new tax rules will affect your finances in 2018 and beyond: - [Tax Bill Calculator: Will Your Taxes Go Up or Down?]( – New York Times - [How the Tax Bill Will Affect Your Paycheck]( – CNN - [The Trump Tax Calculator]( – MarketWatch - [Effects of the Tax Cuts and Jobs Act on Representative Families]( – Tax Policy Center - [Who Gets a Tax Cut Under the Tax Cuts and Jobs Act?]( – Tax Foundation Your Prize for Making It Through the Year Take a look back at the year that was with these photo galleries from the [BBC]( [Bloomberg]( [NBC]( and [The New York Times](. Or close out the year on a wild note with National Geographic’s [Best Animal Photos of 2017](. Bonus tip for making your New Year’s Eve magical, via [Phil Collins]( on Twitter: “If you play 'In The Air Tonight’ by Phil Collins on December 31st at 11:56:40 the drum break will play right as the clock strikes midnight. Start off your new year right.” News - [Wealthy Americans Are Already Trying to Exploit the New Tax Law]( – Bloomberg - [Republicans Plan Mega Marketing Push to Sell Unpopular Tax Plan]( – Politico - [Tax Cut Complete, Hawks Push for Military Increase]( – The Hill - [How the Carried Interest Break Survived the Tax Bill]( – Bloomberg - [5 Things to Do Before Jan. 1 to Lower Your Tax Bill]( – Washington Post - [Trump’s Mar-a-Lago Tax Deal Veiled from IRS Review]( – Palm Beach Post - [Town Fears G.O.P. Tax Plan Will Erode Its Egalitarian Pillars]( – New York Times - [How to Get a Tax Break for Charitable Donations Under the Republican Tax Bill]( – MarketWatch - [At Least $600,000 in Public Money Spent Settling Senate Misconduct Claims Since 1997]( – Politico - [Is Steve Bannon Running for President?]( – Vanity Fair Views - [Democrats Are Fooling Themselves About Tax Reform’s Unpopularity]( – David Harsanyi, National Review - [The Republican Tax 'Reform' Deserves to Die]( – Matt Labash, Weekly Standard - [Tax-Cut Santa Is Coming to Town]( – Paul Krugman, New York Times - [Nancy Pelosi’s Apocalyptic Tax Bill Delusions]( – Rich Lowry, New York Post - [Republicans Think a Little Extra Spending Money Can Reverse Outrage Over Their Tax Overhaul]( – Jamelle Bouie, Slate - [The GOP Passed Tax Reform. Now What?]( – Matthew Walther, The Week - [Why Trump Tax Reform Will Be Even Better Than Reagan]( – Jack Bouroudjian, CNBC - [Republicans Abandoned Any Pretense of True Tax Reform]( – Bruce Bartlett, USA Today - [Donald Trump Just Pulled Off the Greatest Long Con in History]( – David Rothkopf, Daily Beast - [The South Will Rise Again Under GOP Tax Plan]( – Jared Dillian, Bloomberg View Copyright © 2017 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book](//thefiscaltimes.us1.list-manage.com/vcard?u=40d2c5373681f5cd830b6d823&id=714147a9cf) If someone has forwarded this email to you, consider signing up for The Fiscal Times emails on our [website](. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](