Trump Likely to Sign Border Deal, Avoid Shutdown

Plus, Trump’s exploding deficit By Yuval Rosenberg and Michael Rainey Trump Likely to Sign Border Deal, Avert Another Shutdown Lawmakers are scrambling to finalize their compromise package on spending and border security — and resolve a [few lingering differences]( — but once they’re done, President Trump is expected to [grudgingly sign]( the deal and keep the government from shutting down again after midnight Friday. “I don’t want to see a shutdown. A shutdown would be a terrible thing,” Trump said Wednesday, adding that White House aides will be “looking for land mines” once the legislative text of the funding package becomes available. Lawmakers [reportedly hope]( to have that text out Wednesday evening, with votes expected in the House on Thursday night and in the Senate after that. The order of the votes may change, and House Appropriations Chairwoman Nita Lowey (D-NY) warned in an [interview]( with Bloomberg that the release of the package could get pushed back to Thursday. “There’s a long list of all kinds of things in there,” Lowey said. “Anything could stop the deal at this late stage.” Still, Democrats and Republicans [expressed confidence]( that majorities in each party would support the final legislation. Quote of the Day “If he signed the [border] bill, based on what has reported and suggested is in the bill, and did nothing else, it would be political suicide. If he signed the bill, based on the way that we believe the bill to be, and takes other methods to obtain funding for additional border security measures, then I think there’s very little political liability from conservatives.” [– Rep. Mark Meadows (R-NC)]( of the conservative House Freedom Caucus, on the prospect of President Trump signing the border deal and then pursuing additional wall funding via executive order Trump’s Exploding Deficit Federal tax revenues fell by 0.4 percent to $3.33 trillion in 2018, the first year under the new tax law, The Treasury Department said Wednesday. The drop in revenues, combined with a 4.4 percent increase in spending, to $4.2 trillion, produced an $873 billion budget deficit during the calendar year, 28.2 percent higher than the year before. Tax receipts in the first three months of the 2019 fiscal year, which started in October 2018, were up 0.2 percent compared to the year before, in part due to tariffs on imports, while spending was 9.6 percent higher (see the Bloomberg chart below). The budget deficit rose to [$319 billion]( during the period — a 42 percent increase from a year earlier. Medicare, Medicaid Control Costs Better Than Private Insurers: Study Growth in Medicare and Medicaid spending per enrollee was slower than in private insurance between 2006 and 2017, according to an [analysis]( released this week by the Urban Institute. Medicare spending per enrollee increased by 2.4 percent a year, while Medicaid spending grew by 1.6 percent a year. Private insurance spending, meanwhile, grew by 4.4 percent annually. Overall spending for the government-run health care programs is growing faster than that by private insurers, the researchers say. Medicare spending growth over the period studied averaged 5.2 percent a year while Medicaid spending grew by an average of 6 percent, compared to 4.4 percent for private insurers. But the study’s authors, John Holahan and Stacey McMorrow, attribute that to much faster enrollment growth in the public programs; average annual enrollment in Medicare and Medicaid increased by 2.8 percent and 4.3 percent, respectively, while enrollment in private insurance plans essentially stayed flat, they say. “After accounting for the enrollment growth in these programs, Medicare and Medicaid have experienced much slower growth in spending per enrollee compared with private health insurance,” they write. “These patterns do not support drastic calls to restructure Medicare and Medicaid in order to slow national health spending growth, and may actually provide some support for efforts to expand public programs or borrow some of their cost containment strategies for use in the private sector.” They warn, however, that their conclusion is only valid if the growth rates seen over the past decade are sustainable — and that the Centers for Medicare & Medicaid Services projects significantly higher growth in per enrollee spending from 2017 to 2026, though there may be reason to doubt the accuracy of those projections. [Read the full analysis here.]( As Dems Debate ‘Medicare for All,’ Voter Support for the Idea Plunges With Democratic proposals to provide “Medicare for all” increasingly in the headlines — and increasingly the subject of debate over whether the program would or should involve [eliminating private insurance]( — a new [Morning Consult/Politico tracking poll]( finds that the net favorability of a single-payer health plan slipped dramatically from January to February, with support eroding among both Democratic and Republican voters. Net support for Medicare for all — the difference between the percentage who favor the idea and the percentage who oppose it — was 27 points at the beginning of the year, [Morning Consult says](. It fell to 12 points in the survey conducted February 7 to 10. Net support dropped by 11 percentage points among Democrats and 21 points among Republicans. The new poll finds that 50 percent of voters still support Medicare for all — but only about half of those supporters say they would still back the idea if it meant eliminating private insurers. Another 22 percent say they would no longer support it, while 29 percent did not know how they would feel. More than three-quarters of voters support a “public option” that would let them choose to buy insurance coverage from the government or private insurers. The tracking poll surveyed 1,991 voters and has a margin of error of 2 percentage points. Tax Experts: Don’t Focus on Smaller Refunds Although tax season has only just begun, early data from the IRS shows that the [average individual tax refund is 8.4 percent smaller]( over the first week of filing this year. Some critics have been quick to blame the Republican tax bill for the drop, citing the loss of deductions for many taxpayers. Other critics have seen more nefarious dynamics at work, blaming the Treasury Department for failing to provide proper guidance on withholding amounts early last year, resulting in bigger paychecks for voters but [smaller refunds]( at the end of the year — and in some cases, surprise tax bills. The Treasury Department, however, pushed back on the initial IRS data earlier this week, [tweeting]( “News reports on reduction in IRS filings & refunds are misleading. Refunds are consistent with 2017 levels and down slightly from 2018 based on a small initial sample from only a few days of data.” Many tax experts agree. Howard Gleckman of the Tax Policy Center [said]( that “the data from the initial week of a filing season that will run for three months means almost nothing,” adding that the government shutdown that slowed the IRS makes the initial numbers even less meaningful than usual. Using the small data sample we have so far to evaluate the GOP tax bill “is a bit like forecasting your favorite baseball team’s chances of winning the World Series based on the results of its rain-shortened opening day game,” Gleckman wrote. More broadly, Gleckman made the argument that many tax experts and financial planners have offered — namely, that it’s a mistake to focus on refunds when all that really matters is how much total tax you pay during the year. Everyone getting a refund has essentially provided the federal government with an interest-free loan, and smaller average refunds would actually make most taxpayers better off financially, since they would be keeping more of their money during the course of the year. And whatever the size of the refund checks, Gleckman says that the tax bill provided most taxpayers with a tax cut in 2018, with about two-thirds of filers paying less, compared to 6 percent who paid more. Economists: Smaller Refunds Could Ding Consumer Spending Although it may make sense financially to minimize your tax refund, it’s worth remembering that people aren’t always rational when it comes to money. In fact, millions of Americans seem to use the tax withholding system to provide forced savings and rely on their tax refunds to help pay for big ticket items like house repairs and car purchases. Chuck Marr of the Center on Budget and Policy Priorities touched upon this issue in a [tweet]( Tuesday: “Note to tax folks who think refunds are a misguided interest free loan. You have the math down. Time to pick up a psychology book.” Michael Pearce, an analyst at Capital Economics, said in a note to clients Tuesday that the reduction in forced savings driven by the new tax rules could potentially affect some parts of the economy this year. Pearce expects the initial trend of smaller refund checks to continue, resulting in a $30 billion drop in disposable income for U.S. households in the first quarter compared to a year ago — the equivalent of a 0.7 drop in annualized disposable income. Although “the reality is that most households will pay less tax overall in 2018 than the previous year,” the timing and size of the refund checks will have an effect and “may hit spending on durables goods particularly hard.” The good news, Pearce says, is that cheaper gas prices should offset the drop in income as far as consumption growth is concerned. And some small business owners and high-income households may find themselves getting larger-than-expected tax refunds thanks to the new pass-through rules, which could help sustain overall economic growth. The durable goods sector would not benefit, however, since lower- and middle-income households are the most likely to turn their refunds into purchases of big-ticket household items, Pearce wrote. News - [Democrats Seeking Obamacare Fix Before ‘Medicare for All’ Roll Out 'Medicare at 50’]( – Washington Examiner - [US Budget Deficit Running 41.8 Percent Above Last Year]( – Associated Press - [America’s 1% Hasn’t Had This Much Wealth Since Just Before the Great Depression]( – MarketWatch - [Americans More Likely to Back Estate Tax Expansion Than Repeal]( – Morning Consult - [New Democrats Push Party, and 2020 Candidates, to the Left on Divisive Issues]( – Washington Post - [Marco Rubio Promises Anti-Buyback Bill 'Soon']( – CNBC - [Howard Schultz: ‘I Should Be Paying More Taxes’]( – Politico - [Smaller Tax Refunds Surprise Those Expecting More Relief]( – New York Times - [Thousands of Texans Were Shocked by Surprise Medical Bills. Their Requests for Help Overwhelmed the State.]( – Texas Tribune - [Obamacare Helps with Housing Payments, New Study Finds]( – MarketWatch - [CVS Introduces New Concept Store with More Health Care, Less Retail]( – USA Today - [Trump Offers No Assurances After Cuomo Meeting on SALT Deduction]( – Bloomberg - [Trump Says His Border Wall Will Be Harder to Climb Than Mt. Everest]( – The Hill Views and Analysis - [Despite His Pre-Election Hype, Trump’s Piling on the Debt as President]( – Philip Bump, Washington Post - [Both Critics and Defenders of the Green New Deal Have a Point]( – David Leonhardt, New York Times - [Medicare for All Is a Trap]( – William A. Galston, Wall Street Journal (paywall) - [A Price Disclosure in Drug Ads Misses the Point]( – Faye Flam, Bloomberg - [A New Bill Could Create a Congress of Millionaires]( – Jonathan Bernstein, Bloomberg - [Imagine Canada as a Tax Haven for Americans]( – Noah Smith, Bloomberg - [Bernie Sanders Would like to Talk about Social Security]( – Helaine Olen, Washington Post - [Why the United States Will Never Have High-Speed Rail]( – Megan McArdle, Washington Post - [6 Things to Listen for When the 2020 Democrats Talk About Policy]( – Perry Bacon Jr., FiveThirtyEight - [Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes]( – Matthew Gardner, Institute on Taxation and Economic Policy - [Howard Schultz’s Campaign Is Based on 3 Ideas, and They’re All Wrong]( – Ezra Klein, Vox - [With Howard Schultz, There's No There There]( – C. Nicole Mason, CNN Copyright © 2019 The Fiscal Times, All rights reserved. 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