Budget plan’s deficits splits Republicans
Washington — Republicans rode the tea party wave to power eight years ago on a message of fiscal responsibility and attacking budget deficits, and kept at it during President Barack Obama’s two terms. That was then.
The Republican-led Congress on Thursday was rounding up support for a bipartisan budget bill that would put the government on track for annual deficits topping $1 trillion, a gap last seen toward the end of Obama’s first term.
The projection for massive budget deficits has split Republicans. Dedicated fiscal conservatives criticized the plan while others accepted it as a necessary compromise to shore up military spending and keep the government running after a short-lived shutdown last month.
“I think the spending in this is reckless and irresponsible,” said Rep. Thomas Massie, R-Ky., a conservative who is backed by the tea party.
Sen. Bob Corker, R-Tenn., said the budget agreement was “doubling down on the irresponsible mentality in Congress of spend now, pay later. To say I am discouraged by the outcome of these negotiations would be an understatement.”
Corker voted for the recent Republican tax cut after raising similar concerns in the weeks leading up to the vote.
Republicans are pinning their long-term hopes on their $1.5 trillion tax cut, which they say eventually will stimulate enough economic growth to help reduce the deficit. GOP leaders were using that argument and a desire to boost military spending to sell the budget plan. Congress needed to approve a spending bill by midnight Thursday to avoid a partial government shutdown.
Many in the GOP ranks were willing to sign on despite the soaring deficit.
“It all comes down to one thing — economic growth. That’s where you take care of the debt and deficit,” said Rep. Dennis Ross, R-Fla.
Wedged into the spending deal is a pack of tax breaks for homeowners and electric car owners — as well as goodies for motor speedways. There’s also tax relief for people and businesses affected by the California wildfires and the hurricanes that devastated Texas, Florida, Puerto Rico and the U.S. Virgin Islands. Owners of racehorses will get a break, too.
The new tax benefits didn’t make it into the Republican-backed tax overhaul enacted in December. Now, with fresh bipartisan legislation allowing the shattering of tight caps on defense and domestic programs, lawmakers have found room for dozens more tax breaks.
The provisions for the disaster-struck areas and the extensions of benefits for homeowners and energy savers are popular with lawmakers from both parties and may have helped sweeten the deal for Democrats, all of whom rejected the GOP tax plan. Most of the proposed tax breaks are not new, but extend expired provisions through the end of this year.
Among the proposed extensions of tax benefits for homeowners: the deduction for mortgage insurance premiums and the exclusion from income of some forgiven debts on mortgages. The deduction for qualified tuition and related expenses for higher education also is extended, subject to certain caps.
Tax credits are extended for investments homeowners make to improve energy efficiency, such as solar panels, windows, skylights, water heaters and heat pumps. The $1,000 to $2,000 credit for building or selling new energy-efficient homes is extended. The $4,000 to $40,000 credit for purchases of new hydrogen fuel-cell vehicles is extended, as is the credit for 10 percent of the amount paid for new two-wheeled plug-in electric cars. Electric car charging stations also benefit.
The tax law that kicked in Jan. 1 already provides a credit of up to $7,500 for purchases of larger plug-in electric cars such as the Tesla Model 3 and Chevrolet Bolt. And it offers tax support for wind and solar energy — while also boosting oil and gas production.
The roar of NASCAR racing, a perennial favorite among both parties, can be heard in the extension of tax rules for so-called motorsports entertainment complexes. The shortened, seven-year period for writing down the value of the asset would be extended. Lawmakers have promoted racing, with its correlated food vending and other facilities, as a job creator. Sen. Debbie Stabenow, D-Mich., has been one of the active proponents of the tax allowance.
The owners of racehorses also get an extension of the three-year period for writing down that asset.
Republicans supporting the package include defense hawks who say military readiness has been harmed by years of automatic budget cuts known as sequestration. The budget bill boosts defense spending by $165 billion over two years.
“If you vote no, you’re voting against fixing the military,” said Rep. Mac Thornberry, R-Texas, chairman of the House Armed Services Committee.
Conservative angst about the growing deficit was valid, he said, “but you are not going to fix them by cutting our military or by failing to provide the equipment that our troops need.”
Other lawmakers cited the need to keep the government running and boost domestic spending on infrastructure and programs such as community health centers. The budget plan also was drawing support from Republicans representing states that would benefit from $89 billion in aid to speed recovery from last year’s hurricanes and wildfires.
Still, some GOP activists worried that the deal reinforces the notion that congressional Republicans are not delivering on their promises to slash spending and reduce the size of government.
Sen. Rand Paul, R-Kentucky, said during a lengthy speech on the Senate floor that it was hypocritical for members of his party to criticize trillion-dollar deficits under Obama, “and now Republicans are doing the same thing.”
Jason Pye, vice president of legislative affairs at Freedom Works, a conservative group that helped launch the tea party movement, said Republicans are retreating on their deficit-reduction message. The House Freedom Caucus denounced the deal for growing the size of government.
“The only folks who should be voting for this are the debt junkies, who love unsustainable spending bills,” said Rep. Mo Brooks, R-Ala., a freedom caucus member.
A leader of the GOP’s fiscal conservatives, Rep. Mark Walker of North Carolina, said he understands the frustration.
“You can make a case that it seems to be a little hypocritical because we ranted and raged during the eight years of Obama about the national debt,” said Walker. “If it’s truly our core principle, it should be equal whoever is in the White House.”
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