Plus, more than 2 million adults in Medicaid âcoverage gapâ
By Yuval Rosenberg and Michael Rainey
Trump Plans to Again Raid Pentagon Funds for Border Wall: Reports
President Trump is planning to shift $7.2 billion in Pentagon funds toward construction of border barriers this year â more than his administration reprogrammed last year and five times what Congress authorized for 2020, The Washington Postâs Nick Miroff first [reported](
âTrump took $2.5 billion from military counterdrug programs for border barrier construction in 2019, but this year his administration is planning to take significantly more â $3.5 billion. Trump administration officials also are planning to take $3.7 billion in military construction funding, slightly more than the $3.6 billion diverted in 2019.
âThe move would bring the total amount of federal funds allocated to border fencing to $18.4 billion under Trump, who made the border barrier a priority during his campaign for the presidency in 2016. He also pledged to make Mexico pay for the barrier, delighting crowds at his rallies.â
Administration officials reportedly [cautioned]( that the final totals could still change.
One eye on the election: The plans are part of an administration effort to âshow major progressâ on Trumpâs signature campaign promise ahead of the 2020 election, The New York Times [reports](. The administration recently [announced]( that it had completed 100 miles of barriers along the southern border, well short of the 450 miles the president has repeatedly [pledged]( to put up by the end of this year. The funding plans would reportedly give the government enough money to complete nearly 900 miles of fencing by spring 2022, though a large portion of that would likely replace existing barriers.
As CQ defense policy reporter Andrew Clevenger notes, the Pentagon projects that have seen their funding halted or delayed have disproportionately been in [Democratic regions]( â and thatâs likely to be the case again this year. âOnce the Pentagon identifies which MilCon projects are being halted to come up with $3.7B, it's a safe bet that most of the $$ will come from Dem-controlled areas,â Clevenger tweeted. âAnd swing states that POTUS needs to carry to win re-election will probably avoid the worst of it.â
More pushback from lawmakers, including Republicans: The administrationâs shifting of Pentagon funds has angered members of Congress, many of whom object to what they call an abuse of power and encroachment on their constitutional power of the purse. âHaving failed to get his way in Congress, it appears President Trump is now once again forcing service members and their families to pay for his wall by cancelling even more vital military construction projects,â House Democratic appropriators [said]( in a statement.
Some Republicans, while more subdued, also voiced concerns. âI wish theyâd get the money somewhere else, instead of defense," Senate Appropriations Chairman Richard Shelby of Alabama [told reporters]( on Tuesday. "But I do support building the wall.â Other Republicans said Democrats had forced Trump to redirect the money by refusing to provide additional border funding.
Challenges have failed: Lawmakers and the courts opened the door to this second round of reprogramming of Pentagon funds. Congress twice voted to terminate Trumpâs national emergency declaration, but each time failed to come up with enough votes to override a presidential veto. And the 2020 spending deal passed by Congress in December, which allocated $1.375 billion toward border barriers, placed no limitation on Trumpâs ability to redirect military money slated for other purposes.
Legal challenges to Trumpâs border wall also have failed to stop construction. A federal appeals court last week [allowed]( the administration to tap $3.6 billion in military construction funds for the border barrier, reversing a lower court decision that halted use of the funds and called Trumpâs national emergency declaration unlawful. The Supreme Court had previously allowed the administration to proceed with construction using $2.5 billion in Pentagon counter-drug funding while litigation in that case continued.
The Trump administration reportedly felt empowered to redirect larger amounts of money this year following the latest court decision.
The bottom line: The administrationâs plans are sure to reignite the debate over the presidentâs money grab â and they likely signal that the border wall will once again play a central role in Trumpâs election campaign. âIt's not surprising that the White House is moving forward with this method to pay for a major campaign issue,â Clevenger [tweeted](. âIt worked before, and Congress has thus far not mustered the collective will to stop it.â
More Than 2 Million Adults Fall Into Medicaid âCoverage Gapâ
The Affordable Care Act enabled states to expand their Medicaid programs to include millions of low-income adults, but as of today 14 states have declined to do so (see this [tracker]( for more details on state expansions.) As a result, 2.3 million people in those non-expanding states fall into a Medicaid âcoverage gapâ in which they earn too much to qualify for Medicaid but not enough to receive tax credits in the Obamacare marketplaces. A new analysis by the Kaiser Family Foundation explains that, âbecause the ACA envisioned low-income people receiving coverage through Medicaid, it does not provide financial assistance to people below poverty for other coverage options."
Who falls in through that crack? âBy definition, people in the coverage gap have limited family income and live below the poverty level,â the Kaiser analysis says. âThey are likely in families employed in very low-wage jobs, employed part-time, or with a fragile or unpredictable connection to the workforce. Given limited offer rates of employer-based coverage for employees with these work characteristics, it is likely that they will continue to fall between the cracks in the employer-based system.â
As the chart below shows, more than 90% of those falling into the Medicaid gap live in the South, and a third live in just one state, Texas.
4 Potential Reforms for the Capital Gains Tax
Reforming the capital gains tax is one way to simultaneously address both rising inequality and growing federal deficits, [say]( William G. Gale and Grace Enda of the Brookings Institution. The current tax system allows some kinds of economic income â unrealized gains in a variety of guises â to go untaxed, and Gale and Enda provide some options for policymakers who want to capture some of that wealth, both to cover existing fiscal shortfalls and to reduce inequality:
1. Eliminate the âAngel of Deathâ loophole: Currently, wealth can be passed on to the next generation on a stepped-up basis, with capital gains and associated taxes wiped out for inheritors and values reset at current levels. Alternatively, estates could be passed down on a carryover basis that keeps original purchase prices in place, leaving the inheritor on the hook for the full capital gains tax at the time of sale. The Joint Committee on Taxation estimates that such a change would produce about $105 billion over 10 years.
2. Tax capital gains at death: Taxing all estates at death would raise billions more than a carryover system, but would likely be difficult to implement for illiquid or hard-to-value assets.
3. Tax capital gains every year: Paying taxes on a âmark-to-marketâ basis every year would raise more than $1 trillion over 10 years by some estimates, but would also likely create serious problems related to valuations and cash flow.
4. Vary the capital gains tax rate: âRetrospective taxationâ would allow the tax rate to increase over time, eliminating the benefits of tax shelters while allowing tax payments to be postponed until an asset is sold.
Tweet of the Day
With the narrowing field of Democratic presidential candidates set to debate again Tuesday night, [Adrianna McIntyre]( a health policy expert, suggested a new line of health-care questions:
The Democratic debate is tonight at 9 p.m. ET. You can watch it on CNN or stream it on the [Des Moines Register site](. 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.
News
- [House to Vote on Military Force Authorizations This Month]( â Roll Call
- [Hoyer: House Priorities for 2020 Include Health Care, Infrastructure, Climate, Redistricting]( â Roll Call
- [Warren Promises to Cancel Student Loan Debt Using Executive Powers]( â Politico
- [Trump Asks Supreme Court to Let Immigrant 'Public Charge' Rule Take Effect]( â The Hill
- [Blue Dogs Push Democrats to Pass Budget]( â The Hill
- [Hospitals Say They Want Affordable Care, but Actions Aren't Clear]( â Axios
- [Eli Lilly to Offer Half-Priced Versions of Two More Insulin Products]( â Reuters
- [Big Pharma Looks to Stem Losses After Trade Deal Defeat]( â The Hill
- [Hospitals File New Lawsuit to Halt 2020 Site-Neutral Payment Cuts]( â Fierce Healthcare
- [After Three Years of Growth, Digital Health Funding Declined in 2019 to $8.9B: Report]( â Fierce Healthcare
- [Trump Administration Weighs Tighter Requirements for Disability Payments]( â Wall Street Journal (paywall)
- [New Jersey Governor Signs Bill Creating Workaround to Trump Tax Law Provision]( â The Hill
- [Loopholes Limit New California Law to Guard Against Lofty Air Ambulance Bills]( â Kaiser Health News
- [LSU Nabs $4 Million Tax Free from National Championship]( â Bloomberg
Views and Analysis
- [President Trump, Hereâs a History of Preexisting Condition Protections]( â Paige Winfield Cunningham, Washington Post
- [To the Contrary, Trump Has Tried to Weaken Protections for Pre-existing Conditions]( â Margot Sanger-Katz, New York Times Upshot
- [The Health-Care Industry Is Letting Surgeons Behave Like Muggers]( â Cynthia Weber Cascio, Washington Post
- [Reducing the Health-Care Tax]( â Jared Bernstein and Dean Baker, Washington Post
- [Trumpâs Plot Against Health Care Continues]( â Paul Krugman, New York Times
- [The ACA Is Doing Fine Without a Mandate Penalty]( â Drew Altman, Axios
- [What a Right to Health Could Mean for the US]( â Jody Heymann, Aleta Sprague and Amy Raub, The Hill
- [Pharmacy Benefit Managers Are Key to Helping Retirees]( â Jane Gilbert, Morning Consult
- [Everyone Should Be Worried About Social Security and 401(K) Plans â Including the Presidential Candidates]( â Alessandra Malito, MarketWatch
- [Trump Likes Farmers Better Than Some Other Welfare Recipients]( â Jamelle Bouie, New York Times
- [Reforming Tax Expenditures for Health Care]( â Gordon B. Mermin, Tax Policy Center
- [A Job Market This Good Didnât Seem Likely 3 Years Ago]( â Conor Sen, Bloomberg
- [Moâ Money, Fewer Problems: Two New Studies Show 1 Percenters Are the Most Satisfied]( â Tory Newmyer, Washington Post
- [Power and Radicalism: Building a Middle Class in the Digital Age]( â Ryan Avent, Brookings Institution
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