Lawmakers Clash Over Plan to Aid Israel, Ukraine

Lawmakers Clash Over Plan to Aid Israel, Ukraine

Lots of talk, not much action.
By Michael Rainey
Wednesday, November 8, 2023

Good evening. House Republicans elected a new vice chair today, with Rep. Blake Moore of Utah replacing Mike Johnson, the new speaker. A few hours later, the House Oversight Committee issued subpoenas to Hunter and James Biden as part of their effort to build a case for impeaching President Joe Biden. And Republican presidential candidates are preparing for another debate tonight – or at least some of them, though not the clear favorite in the race, former president Donald Trump. Meanwhile, lawmakers in Congress continue to work on a funding plan for the federal government, though without making much progress, less than two weeks before a shutdown deadline.

Here's what you need to know.

Fight Over Immigration Policy Could Delay Aid for Israel, Ukraine

With just nine days to go before funding runs out for large swaths of the federal government, lawmakers are still having trouble agreeing on how to proceed.

House Republicans had hoped to vote today on a funding bill for Transportation and Housing and Urban Development, known as THUD, but pulled the bill late Tuesday due to disagreements within their caucus, in part over potential cuts for Amtrak. Another spending bill, covering Financial Services and General Government (FSGG), also appeared to be in trouble as of Wednesday afternoon due to a provision touching on abortion.

"If House Republicans have to pull THUD and FSGG in one week, that will be a massive black eye," Punchbowl’s Jake Sherman wrote. Sherman also said that given the lack of progress in the House, there’s "a better-than-even chance" that the government shuts down at the end of next week.

Over in the Senate, lawmakers sparred over a different spending issue, the emergency spending request for Israel and Ukraine, which includes funds to enhance border security.

On Tuesday, Senate Minority Leader Mitch McConnell made it clear that Republicans will not back a massive foreign aid package if it fails to include substantial policy changes on the border with Mexico in addition to money. "Everybody knows how strongly I feel about helping Ukraine — and Israel," he told reporters. "[But] the border needs to be a part of it if it’s going to clear the Senate."

Appearing before the Senate Appropriations Committee Wednesday, Homeland Security Secretary Alejandro Mayorkas rejected that approach. "We need the funding that we are requesting immediately," he said. "We fully endorse the need for policy changes, not in piecemeal form, but in a comprehensive form."

Sen. Lisa Murkowski argued that some reform is better than no reform as lawmakers wait on a comprehensive package. "We need to make some incremental gains here," the Alaska Republican said. "I hope you take seriously that we will not be able to get the support that we need for Israel, for Ukraine, for the Indo-Pacific, for the disasters, unless there is true, meaningful border security as part of this supplemental" bill.

But Appropriations Chair Patty Murray reiterated the Democratic stance. "I want to be clear to Republicans who think this is their chance to jam through a huge far-right wish list on immigration," she said, this "partisan" proposal "is not going to go anywhere."

The bottom line: The clock is ticking, but lawmakers are no closer to preventing a government shutdown and providing emergency funds for Israel and Ukraine than they were two weeks ago.

Chart of the Day: The Benefits of Child Care Spending

The White House Council of Economic Advisors released an analysis of the impact of federal spending on child care during the pandemic. In early 2021, Congress passed the American Rescue Plan, which provided $24 billion to child care providers, with the money going toward things like salaries, rent and utilities as part of an effort to stabilize an already troubled industry. According to the CEA, "these funds succeeded in slowing cost growth for families, stabilizing employment and increasing wages for child care workers, and increasing maternal labor force participation." The paper estimates that the spending had a benefit-cost ratio of roughly 2:1 – "indicating that these funds not only had the intended effect but were also well spent."


Actuaries Weigh In on Social Security Shortfall

The Social Security system is facing a shortfall as its combined trust funds become depleted in 2034, which could result in a roughly 20% cut in benefits if Congress fails to act to correct the problem. A new paper from the American Academy of Actuaries takes a close look at the problem and provides a menu of options for policymakers as they work toward a solution.

Here are some of the options discussed by the actuaries:

* Increase the payroll tax rate by 25%. Raising the current payroll tax of 6.2% to 7.75% – for both workers and employers – would head off any benefit cuts. The increase could come all at once in 2034, but the actuaries recommend phasing in the increase starting in 2025. "Increasing the tax rate will be financially difficult for some people with very low income," they write. "It would be less disruptive to employers and workers if increases in the tax rate were gradually phased in."

* Eliminate the income limit on payroll taxes. Workers stop paying payroll taxes on income once they hit $160,200 in 2023 (the cap is adjusted upward every year). Eliminating that cap and applying payroll taxes to all pay would cover about 78% of the expected shortfall.

* Tax investment income, estates, gifts and earnings such as carried interest. These forms of income are not currently taxed as part of Social Security, but could help cover about 64% of the shortfall in 2034, though proposals vary.

* Reduce benefits for high earners. There are various proposals to reduce payouts to retirees who have substantial private incomes. The effects vary but are relatively small overall.

* Raise the retirement age. It’s controversial because of the growing divide in life expectancies between college-educated office workers and everyone else, but gradually raising the retirement age from the current level of 67 to 69 would cover about 10% of the projected shortfall by 2034.

Whatever Congress does, the actuaries recommend they get started now. "The sooner you can have Congress come together and come up with some options to address these challenges, the better it is for the American people," Linda K. Stone, senior pension fellow at the American Academy of Actuaries, told CNBC.

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