Enormous Spending Package Will Dominate Lame Duck Session
Author: Greg Valliere
November 16, 2022
OSTENSIBLY, THIS PACKAGE has only one purpose: to approve a new budget resolution, which was temporarily extended at the end of the fiscal year on Sept. 30. The new deadline is Dec. 16; failure to act by then could prompt a government shutdown shutdown just before the holidays, and no one wants that.
SINCE SOMETHING HAS TO PASS, there are only two options: still another extension, lasting into late winter, or a deal close to Christmas Eve. The latter option
has lobbyists salivating over a huge package of new spending. Here are some
of the provisions under consideration . . .
PERHAPS THE BIGGEST PRIORITY FOR DEMOCRATS is passage of a new debt ceiling, even though the current $31.4 trillion limit won’t be exceeded until next summer. But House Republicans could attempt to shut down the government by rejecting a new debt limit next year; they think this could force spending cuts.
DEMOCRATS CONTEND THAT REPUBLICAN CUTS NEXT YEAR could include reforms of Social Security and Medicare (an exaggerated threat, in our opinion). Nevertheless, Democrats want a debt ceiling deal next month, when they will still control the House.
EVERYONE WANTS TAX BREAKS: Democrats will try again to pass an expanded child tax credit; a modest hike from the $2,000 per child annually is possible, along with a tax credit for child care and dependent care — but business will demand tax breaks in return. An excellent piece yesterday on the Bloomberg web site lists some business tax breaks that are now on the table:
* Renewing a tax break known as “bonus depreciation” that allows businesses to
write off their equipment purchases in a single year, benefiting companies with large
capital expenditures.
* Reinstating a more generous deduction for interest expense writeoffs that expired at the end of 2021. This would benefit highly leveraged companies, including private equity and venture capital firms, according to the Bloomberg article.
* Reviving more generous deductions for a company’s research and development expenses.
ANOTHER PROVISION THAT IS CLOSELY WATCHED in the financial industry could be attached to this huge package. It would make a series of changes to expand savings — such as boosting automatic contributions for retirement plans and encouraging small businesses to provide retirement benefits. This measure has strong bipartisan support.
STILL ANOTHER MAJOR PROVISION would re-authorize the National Defense Authorization Act, or NDAA, the annual must-pass legislation that sets the Pentagon’s budget. There’s a wild card in this provision — granting the Justice Department authority to sue OPEC for price-fixing.
MORE MONEY FOR UKRAINE: The White House asked Congress yesterday for $37.7 billion in new aid for Ukraine, which White House officials want passed this year, before the new House takes power, with may bring less enthusiasm for huge new aid to Kyiv.
THERE ARE OTHER PROVISIONS THAT don’t really affect spending: confirmation
of dozens of federal judges, protection for gay marriage, making it harder to
overturn a certified presidential election, and restrictions on lawmakers’ stock trading.
THIS HUGE PACKAGE COULD WIND UP COSTING hundreds of billions of dollars, so it could sink from its own weight. But “earmarks” are now back as seemingly everyone scrambles to take advantage of the feeding frenzy on Capitol Hill. Spending curbs are possible in 2023 — but one final pig-out is on the holiday menu in 2022.
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