US Paid Federal Employees $3.7 Billion Not to Work

Plus, Trump's tax cuts: Success, failure or too soon to judge? By Yuval Rosenberg and Michael Rainey Recent Government Shutdowns Cost $4 Billion The last three government shutdowns cost the government about $4 billion and more than 56,000 years in lost productivity, according to a new bipartisan report. The Senate Homeland Security and Government Affairs Permanent Subcommittee on Investigations released its report Tuesday after spending months analyzing the time, money and effort that was wasted in the three shutdowns of the federal government since 2013. The report covers the most recent and longest shutdown, which began in late 2018 and lasted 35 days, as well as the brief shutdown at the beginning of 2018 and the 16-day shutdown that occurred in 2013. Most of the money went toward back pay, with $3.7 billion paid to workers who were forced to stay home while their agencies and departments went without funding. Another $338 million was for related costs, including lost revenues, late fees and additional administrative work. And the total time lost by furloughed employees came to 56,938 years of work. The report’s authors said the total cost was likely higher, since they were unable to gather all the information they were seeking. For example, the Departments of Defense, Agriculture, Justice, Commerce and the EPA did not provide “basic information about employee furloughs, including back pay, for certain shutdowns.” And the total cost to taxpayers was likely higher still, the report noted, since the shutdowns reduced economic growth, with the Congressional Budget Office estimating that the most recent shutdown lowered GDP growth by $11 billion in the final quarter of 2018 and the first quarter of 2019. Here’s a brief sample of some of the waste related to the shutdowns documented in the report: - The Department of Justice cancelled roughly 60,000 immigration hearings for non-detained aliens during the most recent shutdown. - The National Transportation Safety Board suspended about 2,000 accident investigations during the early 2018 shutdown. - The Department of Homeland Security delayed facility maintenance activities, endangering the lives of law enforcement officers during the 2018-19 shutdown. - The Consumer Product Safety Commission stopped screening imported products during the 2018-19 shutdown, potentially allowing children’s goods with excessive lead levels into the country. "Federal government shutdowns don't save money,” committee chair Sen. Rob Portman (R-OH) said Tuesday. “They actually cost taxpayers billions of dollars.” Read the [full report here](. In Border Wall Fight, Dems Say GOP Is Pursuing Same Path That Led to Shutdown The Senate fight over funding President Trump’s border barriers is heating up. Senate Democratic leaders are urging Senate Majority Leader Mitch McConnell and Senate Appropriations Chairman Richard Shelby to open up new talks on government funding bills for fiscal year 2020 in order to avoid a government shutdown. In a letter [obtained by Politico]( Senate Minority Leader Chuck Schumer and other Democrats warn that Republicans “are pursuing the same path that led to last year’s 35-day government shutdown—funding the President’s controversial, ineffective wall no matter the cost to the American people.” Democrats charge that the Republican spending plans “steal $5 billion” for border construction from the Labor-Health and Human Services-Education appropriations bill and would allow Trump to take $7.2 billion more for the wall from military construction projects. “Republicans have chosen to back the president’s demand for an additional $12 billion in funding for his border wall, taken from other sources, including medical research, opioid treatment and funding intended for our military, their family, their kids,” Schumer [said]( on the Senate floor. Senate Majority Leader Mitch McConnell will push the issue this week by trying to move funding bills and forcing Democrats to block them. “My Democratic colleagues seem eager to bog down the funding process with all their outstanding disagreements with the president," McConnell said Tuesday, according to Politico. "Whatever rationale my colleagues across the aisle may offer for these new disruptions, let’s get one thing straight: Holding defense funding hostage for political gain is a losing strategy." McConnell has reportedly [set up a test vote]( Wednesday on a House-passed defense spending package, but the measure is expected to fall short of the 60 votes required after Republicans eliminated language requiring congressional approval before the administration could shift military funding toward border construction. Tennessee Releases Plan to Turn Medicaid into Block Grant Tennessee officials released details Tuesday of a proposal to convert the state’s $8 billion Medicaid program into an annual block grant. If approved, the plan would become the first of its kind in the U.S. A block grant system would provide Tennessee with a lump sum of money from the federal government that the state could use for health care, without many of the current rules and requirements that are attached to the Medicaid program. A portion of any money that is saved through efficiencies could be kept by the state to boost benefits or expand coverage. Republican Gov. Bill Lee has claimed that the state could save as much as $1 billion a year by running the state’s current Medicaid system, called TennCare, on its own. The proposal could affect roughly 1.4 million people in Tennessee who currently rely on TennCare for health insurance, including half of the children in the state. Tennessee is one of 14 states that have not expanded their Medicaid programs as allowed by the Affordable Care Act. The state proposal has three main components: - A block grant to provide a floor for federal participation in the program, to be adjusted upward with inflation. The state estimates the block grant under current conditions would equal roughly $7.9 billion. - A per capita adjustment to reflect growth in enrollment. - A sharing mechanism to measure the savings that “are attributable solely to the state’s hard work.” Some parts of TennCare would not be affected, including outpatient prescription drugs and services for people with intellectual disabilities. The politics: Conservatives have long pushed block grants in Medicaid, but the concept is still controversial. “The idea of a Medicaid a block grant to states has been a political flashpoint for decades, back to Ronald Reagan,” Larry Levitt of the Kaiser Family Foundation [tweeted]( Tuesday. “It's a rallying cry for conservatives, and an alarm bell for liberals.” Proponents say that states could save money by running their programs more efficiently, but critics worry that low-income beneficiaries may suffer, especially during economic downturns when the demand for Medicaid services typically increases. The Trump administration has urged states to move toward the block grant model for the Medicaid systems, and Tennessee is the first state to do so. What’s next: The draft plan is now open for public comment. Under Tennessee law, the state must submit its final plan to the Centers for Medicare & Medicaid Services by November 20. If approved, the state and the federal government would then have to negotiate the final terms of the agreement, a process that could take many months. For more details, read the [full proposal here]( and an analysis in the [Nashville Tennessean here](. Democratic Senators Seek to Block Trump's ‘Public Charge’ Rule Democratic senators Mazie Hirono of Hawaii and Richard Blumenthal of Connecticut introduced legislation Tuesday to block the Trump administration’s [“public charge” rule](. The rule, finalized last month and scheduled to take effect on October 15, allows the government to deny entry or green cards to immigrants based on their use of public programs like food stamps, Temporary Assistance for Needy Families, housing assistance and Medicaid. Under the rule, an immigrant who receives one or more of the specified public benefits for more than 12 months in any 36-month period would be ineligible for entry or lawful permanent residence in the U.S. The rule would also require immigration officials to consider factors such as an immigrant’s age, health, wealth, family size, skills, education and English language proficiency. Under the previous rule, only receipt of significant direct cash subsidies from the government led immigrants to be deemed “public charges.” Ken Cuccinelli, the acting director of US Citizenship and Immigration Services, [said]( last month that the revised rule is intended ensure that immigrants “can stand on their own two feet.” Hirono’s Protect American Values Act, which has 26 Senate Democratic co-sponsors, would block enforcement of the new rule, which critics charge is a cruel contravention of the American ethos — and a [threat to the economy](. “The true effect, and therefore, the true intent behind the administration’s public charge rule is to create a climate of fear among immigrant families, and it’s working,” Hirono [said]( Tuesday. The public charge rule also faces [legal challenges]( including lawsuits brought by some [16 state attorneys general](. The Trump Tax Cuts: Success, Failure or Too Soon to Tell? Get ready, tax geeks. The American Enterprise Institute, a right-leaning think tank, has just launched a [new blog series]( examining the impact of the Trump tax reform. “Clearly, the only thing certain about the TCJA is its uncertainty,” AEI says in its introduction. “What answers do we have so far, and what do we hope to learn going forward? Has the TCJA sparked the growth it promised? Did it in fact make the tax code simpler and fairer? Is it a giveaway to the rich, or are all Americans benefiting? Is the TCJA a success or a failure, or is it too early to tell?” A First Crack In the first post in the series, Aparna Mathur, an AEI resident scholar in economic policy studies, looks at whether the tax changes have delivered on a couple of big promises — namely, that they would boost business investment and worker wages. Mathur says that both physical capital formation and equipment investment have grown since the law was passed, but that growth appears in line with previous trends. Similarly, wages have risen but it’s hard to connect that directly to the tax cuts. On the other hand, Mathur writes, corporations have been bringing back more overseas profits and the number of corporate inversions, in which businesses restructure to relocate their official headquarters in a foreign country, are down (though there’s evidence that trend started before the tax law was passed). A Complex Story Mathur concludes that it’s just too soon to tell whether the tax overhaul worked as intended. “Impacts on investment and wages are typically shown to occur over much longer periods, definitely longer than a year and a half,” she writes. But — and this is a big but — she argues that there’s another, less obvious reason the effects of the tax law aren’t showing up in the data yet: “the TCJA did not simply provide a massive corporate rate cut for companies.” Yes, the law did slash the federal corporate tax rate from 35% to 21%. But it also included an alphabet soup of other changes to the international tax system that applies to multinational corporations — provisions known by the acronyms GILTI, BEAT and FDII that Mathur says “added a ton of [complexity]( and uncertainty to the corporate tax code.” Those rules have been hard to figure out, potentially leading companies to hold off on investment decisions until the tax implications are clarified. “Clearly, companies are dealing with a lot more than a simple corporate rate cut,” Mathur says. (New York Times economics reporter Jim Tankersley [notes]( that “when the White House forecast effects of the tax cuts on investment and GDP in late 2017, it ... did not include any of those international provisions.”) Outside Pressures in Play On top of all that, Mathur adds, the tax cuts added to the deficit, which could still impact economic growth. And the changes are “playing out in an economy that is facing trouble from the possible escalation of tariffs and a trade war and from uncertain global economic conditions.” (That’s unquestionably true, and we’ll wager it’s an argument that supply-side economists and other tax-cut supporters will be making for years to come. Mathur urges caution before judging the tax law to be a failure: “In short, teasing out the impacts of the largest tax overhaul the country has seen in decades on households and the economy will take time,” she writes. “So let’s be patient. It’s too early to give up on the Tax Cuts and Jobs Act. The bottom line: It’s still early, but Mathur makes a strong case that the Tax Cuts and Jobs Act didn’t simplify the tax code in the way many reformers would have liked — and the data thus far don’t show the gains that its advocates said would be coming. News - [Farm Bailout Money Likely to Be Included in Stopgap Spending Bill Amid Pressure from Moderate House Democrats]( – Washington Post - [Election Security Funds Caught in Crosshairs of Spending Debate]( – The Hill - [Swing-State Voters Oppose 'Surprise' Medical Bill Legislation, Trump Pollster Warns]( – The Hill - [Congress Is Probing Secretive Groups Opposing Medical Billing Reforms]( – Washington Post - [Senate Set for Floor Showdown Over Trump Border Wall]( – The Hill - [Pentagon Puts Brakes on 3 Border Barrier Projects Because of Cost]( – Politico - [Trump Froze Aid to Guatemala. Now Programs Are Shutting Down]( – NPR - [With 5G in Mind, Senators Plan Big Boost for Pentagon Cybersecurity]( – Roll Call - [Health Care Friction in the UAW Strike]( – Axios - [With Ominous TV Spots and a Senior ‘Strike Force,’ AARP Launches an All-Out Attack on Pharma]( – STAT - [Holdouts Vow to Challenge Purdue Pharma Settlement]( – The Hill - [Repealing Medicaid Access Rule Could Vastly Lower Provider Pay, Say Opponents]( – Modern Healthcare - [Air Force Crews Stayed at Trump’s Turnberry Resort for Days at a Time]( – Politico - [Extra-Long Sustainment Contracts Are Lockheed’s Latest Bid to Cut F-35 Costs]( – Defense One - [Why the ECB’s Calls for Fiscal Stimulus Are Playing on Deaf Ears]( – MarketWatch Views and Analysis - [Congress Is Supposed to Decide How the U.S. Spends Money. Soon, It Won’t Be Able to.]( – Eugene Steuerle, Washington Post - [How Elizabeth Warren Has Stayed Out of the Medicare-for-All Fray]( – Dylan Scott, Vox - [Even Elizabeth Warren’s Fans Have Doubts About Her Plans]( – Russell Berman, The Atlantic - [To Rein in Rising Health Care Costs, End Big Pharma’s Reckless Patent Abuse]( – Matthew Lane, Morning Consult - [Trump Is the Almost, Occasionally, Pretty Close to Socialist Policy Guy]( – Judd Gregg, The Hill - [Trump Reveals a Motivation for His Anti-Homelessness Push: Foreign Real Estate Tenants]( – Philip Bump, Washington Post - [Congress Must Enact Greater Taxpayer Protections]( – Karen Orosco, The Hill - [How Tom Steyer Wins the Presidency]( – Laurence Kotlikoff, The Hill [Like Us on Facebook]( [Like Us on Facebook]( [Read Us On the Web]( [Read Us On the Web]( Copyright © 2019 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]( Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](.