No Deal on Trump's Border Wall

Plus, why history won't be kind to Paul Ryan By Yuval Rosenberg and Michael Rainey No Deal on Border Wall as Lawmakers Scramble to Avoid Partial Shutdown As negotiations to avoid a partial government shutdown next week continue, Democratic lawmakers have rejected a Republican proposal to spend $5 billion on the border wall over two years. “No matter how many years you spread it over, $5 billion for President Trump’s wasteful wall is too much money,” said Rep. Nita M. Lowey (D-NY), who sits on the House Appropriations Committee. Sen. Chuck Schumer (D-NY) said Democrats won’t agree to more than $1.6 billion for the wall in any spending deal, and blamed Trump for the failure so far to reach an agreement. One possibility [being discussed]( Friday is that lawmakers could pass six of the seven outstanding spending bills next week, leaving the more controversial Homeland Security bill and its border wall funding to a later date. Congress could pass a continuing resolution for Homeland Security, keeping funding at its current level until the end of the fiscal year. GOP Tax Bill Running Out of Time The tax bill introduced this week by outgoing House Ways and Means Chair Kevin Brady (R-TX) faces a tough and increasingly narrow road ahead. Politico’s Brian Faler [reports]( that several top congressional tax aides doubt the bill will get the attention it needs to move forward given the more pressing partial government shutdown that looms at the end of next week and the limited time left in the lame-duck session. A scheduled Friday vote on the bill in the House has been postponed. The [catch-all tax bill]( called the “Retirement, Savings, and Other Tax Relief Act of 2018,” would extend more than two dozen tax breaks, make technical corrections to the 2017 tax bill, tweak retirement account rules and rescind a new tax on fringe benefits for non-profit employees, among other things. According to the Joint Committee on Taxation, the bill would [reduce revenue]( by about $54 billion over 10 years. Even if the bill does get through the House, Senate Democrats are unlikely to support it without significant alterations and concessions from the GOP, assuming they’re willing to address it all. “So far,” The Wall Street Journal’s Richard Rubin [writes]( “Democratic senators’ reactions to the House proposal have ranged from wary to hostile.” Given the need to address funding bills and the farm bill in the few remaining legislative days left this year, Congress could “leave for the year without addressing taxes at all,” Rubin says. Poll of the Day: Obamacare Popularity Slipping [From Gallup]( “Americans' approval of the Affordable Care Act (ACA) continues to edge downward from its record-high 55% in April 2017, when congressional Republicans first attempted to dismantle it. The public is now about evenly divided in their opinions of the 2010 healthcare law, with 48% approving and 47% disapproving.” Opinions of the law remain split along highly partisan lines, but approval among independents has sagged from 56 percent in mid-2017 to 47 percent this month. What do Americans think should happen with the ACA? Here’s what Gallup found: Column of the Day: Paul Ryan’s Legacy “It’s hard to imagine history will treat him or this Congress well for a tax bill that at best gave a temporary sugar high to the economy, did not result in massive wage increases as advertised, did not simplify the code (to the contrary, it made it more complicated), worsened wealth inequality with massive tax breaks for the rich and squeezed revenue as we continued to spend with abandon. In exchange for his great achievement — which is also weirdly responsible for one of his major regrets (the debt) — Ryan sacrificed a whole lot.” – Washington Post columnist Jennifer Rubin, responding to outgoing House Speaker Paul Ryan’s claim Thursday that “history is going to be very good to” the Republican majority he led. [Read Rubin’s column]( for more details on what Rubin calls Ryan’s “awfully bad trade-off.” Chart of the Day: Trump's Tariff Revenue President Trump said this week that tariff increases by his administration are producing "billions of dollars" in revenues, thereby improving the country’s fiscal situation. But CNBC’s John Schoen [points out]( that while tariff revenues are indeed higher by several billion dollars this year, the total revenue is a drop in the bucket compared to the sheer size of government outlays and receipts – and the growing annual deficit. Op-Ed of the Day: Defense Spending and the Deficit The Republican chairs of the Senate and House Armed Services committees take to the op-ed page in Friday’s [Wall Street Journal]( (paywall) to push back on President Trump’s recent request to trim the defense budget for fiscal 2020. The Trump administration has reportedly asked the Pentagon to prepare for a $700 billion budget, down from $716 billion for fiscal 2019 and $33 billion less than the White House’s original plan. “Any cut in the defense budget would be a senseless step backward,” write Sen. James Inhofe of Oklahoma and Rep. Mac Thornberry of Texas. Their argument: “Recent reports suggest this proposed $33 billion cut was prompted by concern about the growing national debt. We share this concern. Failing to address this challenge, especially through entitlement reform, will have profound consequences for the economy and national security.” “We also acknowledge there is money to be saved in the Pentagon. But deliberate reform—not capricious last-minute cuts—is the way to achieve savings. … [C]utting defense will not close the deficit. The deficit would keep growing even if we eliminated the entire Pentagon budget. The president and Congress should not be duped into a false choice: rebuild our military or accept deep and growing deficits. … President Trump can prevent this $33 billion cut and the resulting damage by ordering the Pentagon to move forward with the $733 billion budget he originally proposed for 2020. We cannot and should not balance our budget on the backs of America’s troops. Too much is at stake. This is a time to follow through on the progress of the past two years and give our troops the sustained, sufficient, predictable funding they deserve.” We asked the budget watchdogs at [Committee for a Responsible Federal Budget]( what would happen to the deficit in the unthinkable case that money for the Pentagon got eliminated entirely, as in Inhofe and Thornberry’s hypothetical. Here’s the CRFB’s response: The deficit would keep growing if defense spending were zeroed out, albeit from a lower level and at a slower pace. To illustrate this, our policy team pulled some numbers together to illustrate the deficit in the hypothetical scenario where all defense spending stopped immediately. (An immediate stop couldn’t happen in reality, because some defense spending that is being spent this year was allocated in prior years.) You’ll note that the deficit would drop in the year that we stopped all defense spending but the annual deficit would continue to grow. The growth would be a bit slower than it otherwise would. Under CBO’s baseline projection, which generally assumes no change in law, the deficit would grow by about $550 billion between 2019 and 2028, from $981 billion to $1,526 billion. Under the scenario where we zeroed out defense spending, the deficit would only grow by about $450 billion over the same time period, from $312 billion to $758 billion. The reason for the growth in the deficit is because while defense spending is growing, it is growing relatively slowly compared to other parts of the federal budget. For instance, we published a graph (Slide 13 [here]( showing the defense spending was only 5% of the growth in spending between 2018 and 2028. The fastest growing programs are Social Security, health care, and interest, which accounted for 82% of spending growth between 2018 and 2028, driven by an aging population, rising health care costs, growing debt, and rising interest rates. Your Prize for Making It Through the Week First Lady Melania Trump unveiled the White House's [Christmas decorations]( this week — and, well, the internet had a lot to say about them, especially the blood red trees. [Time.com]( [Vox]( and [SFGate]( all collected some of the best responses. News - [7.0 Earthquake Strikes Alaska]( – CNN - [Trump Signs Nafta Replacement, but Hurdles Remain in Congress]( – Bloomberg - [First Bill for New House Democratic Majority: Campaign Finance, Ethics Reform]( – Politico - [For Wisconsin’s Poor, a Painful New Model for Food-Stamp Aid]( – Washington Post - [Trump Administration Offers States Four Ways to Circumvent Obamacare Rules]( – Washington Post - [Congress Gives Flood Insurance a Short-Term Extension]( – Bloomberg - [DOJ Announces $16.7 Million in Funding to Help Victims of Las Vegas Mass Shooting]( – The Hill - [Bloomberg Announces $50 Million to Fight Opioid Epidemic]( – Associated Press - [Why Aren't Millennials Spending? They're Poorer Than Previous Generations, Fed Says]( – NPR - [In Every State, the Minimum Wage Is Lower Than What Residents Want, Study Says]( – Washington Post - [Trump's Wealthiest Cabinet Members Earned Millions in 2017]( – Politico Views and Analysis - [The Slow-Motion Collapse of the American Health-Care System]( – Ryan Cooper, The Week - [Paul Ryan Departing Washington in a Blaze of Fraudulence]( – Jonathan Chait, New York - [Senate GOP Revolt Against Trump Makes A Shutdown Next Week Less Likely]( – Stan Collender, Budget Guy Blog - [The Surprisingly High Number of Americans Getting Absolutely No Raises]( – Evan Horowitz, Washington Post - [It’s Time to Move on Sustainable Infrastructure]( – Reps. Gerry Connolly, Doris Matsui and Paul Tonko, The Hill - [Does Trump Get One Thing Right About the Fed?]( – Andrew Van Dam, Washington Post - [Talking About Costs: Innovation in Clinician-Patient Conversations]( – Emmy Ganos, et al., Health Affairs Blog - [It’s Time to Start Paying Your Taxes Like a Billionaire]( – Laura Saunders, Wall Street Journal (paywall) - [The New American Dream? Northern Europe]( – Simon Kuper, Financial Times Copyright © 2018 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 712 Fifth AvenueNew York, NY 10019 [Add us to your address book]( 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](