Congress Has Three Days to Avert a Government Shutdown

Plus, a new fight over Trump's tax law By Yuval Rosenberg and Michael Rainey Congress Has Three Days to Avert a Government Shutdown This Week You may not have realized it with [everything]( [else]( [going on]( but we’re technically just a few days away from a government shutdown. Current funding for federal agencies expires after November 21 — that’s Thursday — and Congress will need to pass another stopgap spending bill this week to avoid a shutdown after that. Lawmakers on Monday [released the text]( of the continuing resolution to extend funding through December 20. The House is expected to vote on the bill Tuesday, with the Senate to follow later in the week. The White House has signaled that President Trump would sign off on the stopgap so long as Democrats don’t try to use the legislation to restrict funding for his U.S.-Mexico border wall, meaning that there’s likely little need to worry about a shutdown happening, at least this week. Tricky talks: House and Senate leaders were not able to reach a deal on the short-term spending bill over the weekend due to disputes over several last-minute provisions. Republicans insisted on a “clean” short-term bill, while House Democrats wanted to add some $7.5 billion in Census Bureau funding to provide the agency with its full operating budget ahead of the 2020 count, Politico [reported](. House Democrats reportedly also sought to address several other issues, including a military pay increase, lapsed funding for historically black colleges and a $7.6 billion rescission in highway funds set to take effect next July. The legislative text released Monday includes about $7.3 billion in Census Bureau funding and a 3.1% pay raise for military servicemembers. The measure also prevents those automatic cuts to highway funding and extends funding for a number of expiring health care programs and the Export-Import Bank. Full-year funding still a challenge: Appropriators had also hoped to reach a weekend deal to allocate $1.3 trillion in funding across the 12 annual spending bills, but those talks reportedly stalled out. House Appropriations Committee Chairwoman Nita M. Lowey (D-NY) and her Senate counterpart, Richard Shelby (R-AL), reportedly hope to clinch a deal on the top-line figures by Wednesday. Still, the obstacles to a full-year spending agreement are large. Lawmakers may buy themselves more time by passing a stopgap measure this week, but skepticism is reportedly growing among the rank and file on Capitol Hill that another month of negotiations will be enough to overcome fundamental differences, especially on the border wall. “Unless something unusual happens around here, I don’t see how we get all our work done and put all the pieces together by [December] 20th,” Rep. Lucille Roybal-Allard (D-CA), who heads the Homeland Security appropriations subcommittee responsible for wall funding, told [The Hill](. Without a deal on full-year funding, lawmakers would again need a stopgap measure to avert a Christmas shutdown. FedEx Battles NY Times Over Trump’s Tax Cuts The New York Times published [a piece Saturday]( highlighting the huge windfall FedEx received from the 2017 GOP tax cuts — and the company’s CEO isn’t happy with the analysis. According to the Times, the shipping and logistics giant saw its tax bill fall from $1.5 billion in 2017 to zero in 2018 thanks to the Tax Cuts and Jobs Act, which reduced the company’s effective tax rate from 34% in fiscal year 2017 to less than zero in fiscal year 2018. But the company did not increase its capital investments by as much as it said it would, according to the Times, raising questions about that crucial link in the economic chain through which the legislation was supposed to boost overall growth and deliver higher wages to U.S. workers. FedEx CEO Frederick Smith — a prominent supporter of the legislation who argued in 2017 that the TCJA would make the U.S. a more attractive place to invest while generating “a renaissance of capital investment” — issued a [statement]( Sunday saying the Times analysis was “factually incorrect” and an “outrageous distortion of the truth.” Smith claimed that the company invested in billions of dollars’ worth of capital goods after the tax cuts and also made substantial contributions to employee pensions. However, Smith did not challenge the basic tax payment data in the Times article, and instead attempted to turn the tables on the newspaper, pointing to its tax history while challenging its CEO to a debate: "I hereby challenge A.G. Sulzberger, publisher of the New York Times and the business section editor to a public debate in Washington, DC with me and the FedEx corporate vice president of tax," he wrote. “The focus of the debate should be federal tax policy and the relative societal benefits of business investments and the enormous intended benefits to the United States economy, especially lower and middle class wage earners.” In its reply to Smith’s statement, the Times said, "FedEx's colorful response does not actually challenge a single fact in our story. We're confident in the accuracy of our reporting." As numerous observers [noted]( the odds of the debate actually occurring are fairly low. It isn’t just FedEx: The Times’ Jim Tankersley, Peter Eavis and Ben Casselman said that FedEx provides just one example of the tax cuts providing a nice boost to earnings while failing to produce the kind of economy-transforming investment proponents claimed would follow: “Nearly two years after the tax law passed, the windfall to corporations like FedEx is becoming clear. A New York Times analysis of data compiled by Capital IQ shows no statistically meaningful relationship between the size of the tax cut that companies and industries received and the investments they made. If anything, the companies that received the biggest tax cuts increased their capital investment by less, on average, than companies that got smaller cuts.” And while the economy does appear to have gotten a short-term boost from the tax cuts, the effects faded quickly with little to show in the long run for the $1.5 trillion cost of the legislation. “Overall business investment during Mr. Trump’s tenure has now grown more slowly since the tax cuts were passed than before,” the journalists said. An Easy Way to Get $1 Trillion More in Tax Revenue? The first step in reforming the U.S. tax system doesn’t involve raising rates or eliminating deductions, say former Treasury Secretary Lawrence Summers and Penn Law professor Natasha Sarin. Instead, the government should concentrate on a task most people would readily agree makes sense: collecting more of the taxes Americans [already owe](. Writing in The Washington Post, Summers and Sarin [argue]( that beefing up the IRS so that citizens — especially wealthy ones — meet their tax obligations would raise more than $1 trillion over the next 10 years, while making a dent in the growing problem of wealth and income inequality. “Our rough estimates suggest that at least 70 percent of the ‘tax gap’— defined as owed but uncollected taxes — comes from underpayment by the top 1 percent,” they write. “This contributes to legitimate concerns that our tax system unfairly advantages the elite.” The authors say that the tax gap will come to more than $7.5 trillion over the coming decade, and their proposal seeks to capture a modest 15% of that shortfall by enhancing reporting requirements that would affect wealthy households with income that is currently subject to little or no reporting to the IRS. (While employee wages get reported to the tax agency, certain business income, rents and royalties do not.) Currently, only 5% of households earning more than $5 million are audited, representing some low-hanging fruit that could be plucked with relatively modest investments at the IRS, Summers and Sarin say. Who's the "Jeopardy!" GOAT? The three top winners in the trivia game show's history will be [going head-to-head]( in prime time early next year. Send your tips and feedback to yrosenberg@thefiscaltimes.com. Follow us on Twitter: [@yuvalrosenberg]( [@mdrainey]( and [@TheFiscalTimes](. And please tell your friends they can [sign up here]( for their own copy of this newsletter. 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Judge Reduces J&J Opioid Fine After Mistaking Thousands for Millions]( – New York Times - [More Older Americans Rely on Medicare and Medicaid]( – Axios - [How Elizabeth Warren Got to ‘Yes’ on Medicare for All]( – New York Times - [Mayor Pete's Twist on College Debt]( – Axios - [The Great American Tax Haven: Why the Super-Rich Love South Dakota]( – The Guardian - [Majority of Anti-Vaccine Ads on Facebook Were Funded by Two Groups]( – Washington Post - [Conservative Groups Are Teaming Up to Defend Trump, and Raise Money]( – New York Times - [In Private Equity’s Battle With Warren, It’s All About Chicken]( – Politico Views and Analysis - [Sanders and Warren Want to Tax the Rich. Here’s Why Their Plans Could Work.]( – Bernie Becker, Politico - [Elizabeth Warren Is No Longer a Medicare-for-All Purist]( – Paige Winfield Cunnngham, Washington Post - [Elizabeth Warren Has a Smart Hedge on Medicare for All]( – Max Nisen, Bloomberg - [Elizabeth Warren Should Have Stuck to Her Guns]( – Ryan Cooper, The Week - [Bernie Sanders Stands Apart from Democratic Pack on Economic Issues]( – Tory Newmyer, Washington Post - [Sanders’s Tax Would Hit Small Investors]( – Fred Hatfield, Wall Street Journal (paywall) - [Opportunity Zones—for Billionaires]( – New York Times Editorial Board - [The Good, the Bad and the Ugly of Pending Prescription Drug Legislation]( – Terry Wilcox, Morning Consult - [Progressives Are Right to Worry About Income Inequality. But Punitive Policy Isn’t the Answer.]( – Washington Post Editorial Board - [Americans Are Losing Their Taste for Dairy Milk. There’s a Lesson in That.]( – Washington Post Editorial Board - [Corporations Are People Too]( – Judd Gregg, 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](.