Trump: I'd Be ‘Proud’ to Shut Down the Government

Plus, the remarkable — and costly — decline of the IRS By Yuval Rosenberg and Michael Rainey Trump Says He’d Be ‘Proud’ to Shut Down Government Over Border Security With funding for parts of the federal government set to expire on December 21, nobody expected Tuesday’s Oval Office meeting between President Trump and Democratic leaders Nancy Pelosi and Chuck Schumer would yield much progress toward averting a partial shutdown — but neither did anyone expect that what was supposed to be a private meeting would turn into a very public clash of the sort that can set the hearts of television news producers racing. In front of reporters and live television cameras, the discussion between Trump, Pelosi and Schumer devolved into an extraordinary, [17-minute]( public sparring match, with the two sides trading jabs about the midterm elections results while holding firm to their positions on funding for a border wall with Mexico. While the Democrats asked for the discussion to continue in private and said that the government shouldn’t shut down over the wall dispute, Trump [seemed to relish]( the public altercation — “It’s not bad, Nancy; it’s called transparency,” he said at one point — and said he would be “proud” to have a shutdown over border security. “I will be the one to shut it down,” he said. Trump wants $5 billion for the wall in 2019, and House Republicans support his demand. The Democrats have offered $1.3 billion for border security and have [backed away from]( a previous $1.6 billion offer. They insist that a wall would be ineffective and a waste of money. With 10 days left before the shutdown deadline, here’s what Tuesday’s meeting means: Democrats got just what they wanted: Egged on by Schumer and Pelosi, who referred to a “Trump shutdown,” the president publicly took ownership of any shutdown over the border wall. “Yes, if we don’t get what we want, one way or the other — whether it’s through you, through a military, through anything you want to call – I will shut down the government, absolutely,” he said. “And I am proud — I’ll tell you what, I am proud to shut down the government for border security, Chuck, because the people of this country don’t want criminals and people that have lots of problems and drugs pouring into our country. So I will take the mantle. I will be the one to shut it down. I’m not going to blame you for it. The last time you shut it down, it didn’t work. I will take the mantle of shutting down, and I’m going to shut it down for border security.” Expect this video to be replayed often if a shutdown happens. “Christmas sure came early for Democrats,” [writes]( The Washington Post’s Jennifer Rubin. And they say avoiding a shutdown is up to Trump: Democratic leaders say they’ve given Trump a couple of ways to keep the government open, either by passing the six outstanding appropriations bills that lawmakers have agreed on and extending Homeland Security funding for a full year at current levels, or by passing full-year extensions for all seven remaining spending bills. “It’s his choice to accept one of those options or shut the government down,” Schumer [said]( afterward. If the government does shut down, the Democratic leaders said they will vote to reopen it — and keep border security funded at current levels — once they take control of the House next month. Tuesday’s battle might actually be a good start: "These types of meetings, these types of break downs, these types of very public impasses need to occur before people settle down and actually start trying to make a deal," CNN’s Phil Mattingly said. And PBS NewsHour’s Lisa Desjardins [suggested]( that the contentious public meeting makes a shutdown less likely, since both sides came across as fighting for their position. “Each side got the base points they wanted, big time, right there.” But the two sides really are nowhere: The White House [characterized]( the meeting as a “constructive dialogue” — no, really — but acknowledged that "Major disagreement remains on the issue of border security and transparency." Democrats have no incentive to give in, so the question is whether Trump will. Oh, and Politico notes that the House will be out of session on Monday and Tuesday, leaving just three working days next week to prevent a shutdown. The public doesn’t want a shutdown — but Republican voters are geared up for a fight: A new [NPR/PBS NewsHour/Marist Poll]( finds that, by a 57 percent to 36 percent margin, Americans think Trump should compromise on the wall to avoid a shutdown. And nearly 70 percent of Americans say they don’t think the wall should be an immediate priority for Congress. But Trump might be more focused on [what his base thinks]( — and Republicans overwhelmingly (65 percent to 29 percent) say Trump should not compromise, even if it means a shutdown. Republican lawmakers, though, are far less interested in a shutdown fight. Asked if he had seen the exchange on television, Senate Republican Whip John Cornyn (R-TX), [said]( “I did, unfortunately. I wish I didn’t.” Welcome to divided government: Tuesday’s wild meeting and personal sniping may have been a preview of D.C. power dynamics over the next two years, as Trump and Democrats play to their respective bases ahead of the 2020 campaign. The problem, Politico’s Playbook team [says]( “Conversations between Pelosi, Schumer and Trump are not really going to be terribly useful since they can't even agree to stick to a basic set of facts.” [Share this story →]( Inside the Remarkable — and Costly — Decline of the IRS Weighed down by budget cuts and staff reductions, the number of audits performed by the Internal Revenue Service has been dropping for years. A new report from ProPublica and The Atlantic takes a look at the long, slow decline of the tax agency, which authors Paul Kiel and Jesse Eisinger say is now “a bureaucracy on life support.” The agency is failing to collect at least $18 billion a year due to its organizational woes, they say — and the total annual loss could be considerably higher. The decline of the IRS, Kiel and Eisinger write, dates back to the Gingrich Revolution in 1994. Since that time, many Republicans have vilified the agency, with some calling for its wholesale elimination. Budget cuts became the norm starting in 2010, when the GOP regained control of the House as part of a backlash against the Affordable Care Act, which required the IRS to administer some of its provisions. Today, the agency is “understaffed, hamstrung and operating with archaic equipment,” the authors write, with little hope for a turnaround on the horizon. [The piece is well worth a closer look](. Some key details and horrifying numbers: - The IRS budget was $12 billion in 2017, $2 billion less than in 2010. - The number of auditors at the IRS fell to 9,510 last year. The last time the agency had fewer than 10,000 auditors was 1953. - The audit rate has fallen by 42 percent, with the IRS conducting 675,000 fewer audits in 2017 than it did in 2010. - Investigations of non-filers — people who don’t file any kind of tax return — have fallen from 2.4 million in 2011 to 362,000 in 2017. - Uncollected debt is “expiring” — passing the 10-year mark, at which point the IRS gives up on collecting it — at record levels. In 2010, about $540 million in uncollected tax debt expired; in 2017, that figure was $8.3 billion. - Corporations and wealthy taxpayers are the biggest winners from the decline in audits and the loss of seasoned analysts and general expertise. The chart below shows the reduction in the audit rate since 2011 for taxpayers earning $500,000 or more. Deficit Climbs to $303 Billion Over First Two Months of Fiscal 2019 The U.S. budget deficit jumped to $303 billion in October and November, the first two months of the 2019 fiscal year, according to [data]( released by the Congressional Budget Office Monday. Here are some key facts and figures from the report: - The deficit for October and November rose by roughly 50 percent from the same time a year ago. - Some of the increase was due to shifts in the timing of federal outlays, like those caused by weekends and holidays. Without those shifts, the deficit would have been 6 percent higher. - Revenues rose 3 percent compared to a year ago, while outlays rose 18 percent. - Spending on interest on the public debt rose by $5 billion, or 8 percent, due to higher interest rates and an increase in the size of the national debt. - Defense spending rose by $9 billion, or 9 percent. - Spending on the Department of Veterans Affairs rose by $5 billion, or 17 percent, due to “a rise in the number of disability compensation beneficiaries and an increase in the average benefit payment.” - Outlays for the Department of Homeland Security fell by $7 billion, or 41 percent, largely due to a decrease in disaster relief spending. - The deficit in November alone was $203 billion, a $64 billion increase from last year, though again some of the increase is due to timing shifts. - The final reading for the October deficit was $100 billion, $2 billion more than the CBO estimated last month. Number of Uninsured Americans Rose by 700,000 in 2017 The number of uninsured people in the United States rose by nearly 700,000 to 27.4 million in 2017, the first increase since 2010, according to an analysis by the Kaiser Family Foundation. The uninsured rate was largely unchanged in states that expanded Medicaid under the Affordable Care Act, but it rose aby 0.6 percentage points in non-expansion states. “Ongoing efforts to alter the ACA or to make receipt of Medicaid contingent on work may further erode coverage gains seen under the ACA,” the foundation says. Taking the Sting Out of a New Tax on Nonprofits Under the 2017 tax law, some churches, charities and other nonprofit organizations are being hit with a new tax on the value of transportation benefits provided to employees, including free parking. The Treasury Department has said it can’t repeal or delay the tax on its own, but on Monday it offered new guidance that provides a way for some nonprofits to avoid the tax altogether. The new tax was created by last year’s law as part of an effort to equalize the treatment of for-profit and nonprofit groups. It has been roundly criticized by nonprofit groups across the country. The new Treasury Department workaround allows nonprofits to simply remove reserved spots in their parking lots by taking down signs. This could be particularly beneficial for churches and other religious organizations, The Wall Street Journal [says](. Here’s an example from the Journal of how it could work: “[C]onsider a church with a 500-space parking lot where 50 spaces are reserved for employees and the remainder are open for parishioners. The church would have to pay taxes on 10% of its costs. But every reserved-parking sign the church removes between now and March 31 could reduce its tax bill. Once the taxable income goes below $1,000, nonprofits don’t owe tax and don’t have to prepare a special return.” Not everyone is happy with the latest guidance, however. David Thompson of the National Council of Nonprofits [told]( the Journal that the rules were too complicated. “Repeal of the provision is the only reasonable response,” he said. And it's only Tuesday! Send your tips and feedback to yrosenberg@thefiscaltimes.com. Connect with us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( to get their own copy of this newsletter. News - [Senators Dumbfounded by Trump Vow to Shut Down Government]( – The Hill - [McConnell Says He’s Hopeful for a “Christmas Miracle” on Government Funding]( – CNN - [Trump Says Military to Build Border Wall If Congress Won’t Fund It]( – Bloomberg - [Republicans Skeptical of Trump’s Plan to Have Military Build the Wall]( – The Hill - [Top Oversight Democrat Wants Hearing on Trump ‘Wasting’ DHS Funds]( – Roll Call - [Congress’s $867 Billion Farm Bill Is Out. Here’s What’s in It.]( – Washington Post - [Brady Moves Right in Revised Tax Plan]( – Politico - [How to Cut U.S. Drug Prices: Experts Weigh In]( – New York Times - [Investigation of Generic ‘Cartel’ Expands to 300 Drugs]( – Washington Post - [Democratic Divide on Drug Pricing Likely in House]( – Politico - [Obamacare Signups Spike on Same Day Obama Tweeted Support]( – The Hill - [Budget Scuffle Stalls ‘Blue Water’ Benefits for Vietnam Vets]( – Roll Call - [Trump Prepares to Unveil a Vast Reworking of Clean Water Protections]( – New York Times - [Trump Administration Hid Report Revealing Wells Fargo Charged High Fees to Students]( – Politico Views and Analysis - [Trump’s Extraordinary Oval Office Squabble with Chuck Schumer and Nancy Pelosi, Annotated]( – Aaron Blake, Washington Post - [The Reality TV President Just Got Beat at His Own Game]( – Chris Cillizza, CNN - [Americans, Reality Generally Disagree with Trump’s Strategy on Border Wall Funding]( – Philip Klein, Washington Post - [5 Takeaways From Trump’s Meeting With Pelosi and Schumer]( – Michael Tackett, New York Times - [Trump's Border Wall Broken Promise]( – Joel Mathis, The Week - [How Paul Ryan Inadvertently Rescued U.S. Treasuries]( – Jeff Spross, The Week - [Pelosi Would Sabotage Progressive Agenda with Pay-Go Rules]( – Dean Baker, The Hill - [Paul Ryan: The Good, the Bad and the Truly Disappointing]( – Patricia Murphy, Roll Call - [PBMs Reduce Drug Costs for Over 266 Million Americans]( – Linda Goler Blount, The Hill - [Ending the Electric-Car Subsidy]( – Ed Feulner, Washington Times - [GM Discovers That Government Bailouts Come with Golden Chains Attached]( – Matthew D. Mitchell and Tad DeHaven, Washington Examiner 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 399 Park AvenueNew York, NY 10022 [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](