Trump Vows to Unilaterally Slash Spending if He Wins

By Yuval Rosenberg

Good evening. Lawmakers are preparing to head home for their July 4th recess after this week, but they’ve got a few key things on the calendar before that. We’ve got more info below, but because “The Blues Brothers” was released on this date in 1980, we want to take a moment to remind you that no matter who you are and what you do to live, thrive and survive, there're still some things that makes us all the same. You. Me. Them. Everybody. Everybody.

Here’s what’s happening.

Senate Appropriators to Set Up a Funding Showdown

The Senate Appropriations Committee is set to meet Thursday morning to consider what are known as 302(b) subcommittee allocations — the topline spending levels for each of the 12 annual appropriations bills. The Senate is expected to set those spending levels in line with the caps set by the bipartisan Fiscal Responsibility Act negotiated by President Joe Biden and House Speaker Kevin McCarthy.

Senate appropriators reportedly hope to send all 12 spending bills to the floor before August recess.

The House Appropriations Committee last week approved $1.47 trillion in discretionary spending for next year, or $120 billion below the caps in the bipartisan deal. Those levels were set after Republican leaders came under fire from right-wing hardliners who insisted on deeper spending cuts and a return to fiscal year 2022 funding levels.

“Simply put, the debt ceiling bill set a ceiling, not a floor, for Fiscal Year 2024 bills,” House Appropriations Committee Chair Kay Granger of Texas said last week. “The allocations before us reflect the change members on my side of the aisle want to see by returning spending to responsible levels.”

By funding the government at different levels, the two chambers are setting up another fiscal showdown that raises the risk of a government shutdown starting October 1. If Congress doesn’t enact all 12 appropriations bills by January, the Fiscal Responsibility Act calls for an automatic, across-the-board cut of 1%.

“It’s not unusual that the House and Senate come up with different bills with different amounts,” Sen. Susan Collins, the top Republican on the Senate appropriations panel, said last week. “So in a way, this is a return to the way things used to be. And in a way, it’s a return to the days when we had conference committees to work out these differences.”

Also this week: The House and Senate Armed Services Committees will hold markup sessions for the National Defense Authorization Act. And Federal Reserve Chair Jerome Powell will testify before panels in the House on Wednesday and the Senate on Thursday.

Trump Vows to Unilaterally Slash Spending if He Wins in 2024

Former president and current Republican presidential candidate Donald Trump says that if he wins the 2024 election, he’ll attempt to restore a legal power to the executive branch that would enable him to unilaterally withhold payments authorized by Congress.

The power of impoundment, which gives the president something like a line-item veto to avoid spending money on programs he opposes, was used by presidents as far back as Thomas Jefferson but was eliminated in 1974 following accusations of abuse by the Nixon White House.

Trump said Tuesday he intends to restore the ability to reduce what he called “wasteful and unnecessary spending.” It’s not clear how he would overturn the Impoundment Control Act of 1974, which eliminated the president’s ability to refuse to carry out spending for specific programs. Trump mentioned both court challenges and working with Congress as options. But he said the revival of the power of impoundment would “help quickly to stop inflation and slash the deficit,” with the savings also being used for tax cuts.

“I will use the president’s long-recognized Impoundment Power to squeeze the bloated federal bureaucracy for massive savings,” Trump said in a message to supporters. Under a new Trump administration, every federal agency would be ordered to identify “large chunks of their budgets that can be saved through efficiencies and waste reduction using Impoundment.” Some types of spending would be immune, including defense, Medicare and Social Security.

More broadly, Trump claimed that the power of impoundment would help him fight what he sees as his main enemies. “[B]ringing back Impoundment will give us a crucial tool with which to obliterate the Deep State, Drain the Swamp, and starve the Warmongers — these people that want wars all over the place; killing, killing, killing, they love killing — and the Globalists out of government,” he said.

Coincidentally or not, this is not Trump’s first encounter with the somewhat obscure Impoundment Control Act. The legislation played a role in his first impeachment in 2019, when he was accused of improperly withholding aid payments to Ukraine in exchange for an agreement to investigate the Biden family.

The Enhanced Child Tax Credit May Not Be Completely Dead

Senate Democrats are looking to revive their enhanced Child Tax Credit and make it permanent. More than 40 senators have signed on to a bill called the Working Families Tax Relief Act that seeks to restore the pandemic expansions of the Child Tax Credit and Earned Income Tax Credit.

“The expanded Child Tax Credit benefitted 61 million American kids, helped cut childhood poverty nearly in half, and cut hunger by a quarter for families,” Colorado Sen. Michael Bennet said in a statement last week. “It was the best thing we’ve done for kids and families in generations. Restoring the expanded Child Tax Credit and Earned Income Tax Credit is a pro-family, pro-work, and pro-democracy policy. We should have never let these tax cuts expire, and it’s past time we get this done.”

As part of the 2021 American Rescue Plan Act, Congress temporarily expanded and enhanced the Child Tax Credit, boosting the benefit from $2,000 per child per year to as much as $3,600 for children age 5 or younger and $3,000 for kids ages 6 to -17. Half of the payments were sent out monthly from July through December of that year. The credit was also made fully refundable so that families with little or no income would still get the full benefit.

The changes briefly slashed child poverty — and then they expired. Most Democrats had hoped to renew the expanded credit but were unable to overcome opposition from some in their own party, most notably Sen. Joe Manchin of West Virginia, who insisted on adding work requirements, and from Republicans.

Despite the similar names, the Democratic bill is not to be confused with the Tax Cuts for Working Families Act, House Republican legislation that would double the standard deduction for many families as part of a three-bill package.

“Republicans argue that people of modest incomes will quit their jobs if the tax code gives them just a little more financial support, but the record shows that employment grew and our economy created millions of jobs while the CTC and EITC expansions were in place in 2021,” Democratic Sen. Ron Wyden of Oregon said. “We’re going to look for every opportunity to pass this legislation in the coming weeks and months, and I’m hopeful that we’ll be able to overcome the opposition.”

The Democratic bill is a longshot to become law, but it could conceivably be part of an eventual bipartisan tax deal that also includes business tax breaks such as the research and development tax credit. “Tax policy is one area where Democrats and Republicans fundamentally disagree with virtually no middle ground,” writes Punchbowl News’s Brendan Pedersen. “But if you really, really squint, you might be able to see the makings of a grand compromise. If the GOP is serious about getting their business-friendly tax policy passed, the journey could start with the child tax credit.”

Read more at Punchbowl News or Thomson Reuters.

Number of the Day: $975 Million

The Biden administration plans to use $975 million from the Inflation Reduction Act to give more than 100 federal buildings across the country clean-energy upgrades, making them more efficient and climate-friendly through the use of heat pumps, solar panels and batteries, among other things.

The U.S. General Services Administration announced the initiative on Tuesday and shared details with The Washington Post. Twenty-eight federal buildings are set to achieve net-zero emissions under the plan and 100 buildings will become all-electric. Switching to clean energy is a goal of President Biden’s Federal Sustainability Plan, which aims for all federal buildings to attain net-zero emissions by 2045.

Correction: Our newlsetter last Thursday incorrectly identified Rachel Roubein. She is a healthcare reporter for The Washington Post. Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to sign up here for their own copy of this newsletter.

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