NC Budget and Tax Center

U.S. defense industry very concerned with Trump-GOP tax plan, which adds to the deficit

House congressional leaders are expected to release their tax plan today, Nov. 2 – a day after it was originally scheduled to come out.

This is the tax bill that President Trump has been promoting and that analysis has shown will primarily benefit the wealthiest 1 percent in America and will cause the U.S. deficit to increase by $1.5 trillion.

As all Americans prepare for Congress to muddy the waters about what this tax bill means here’s a simple formula to keep in mind:

The U.S. defense industry appears to understand the reality of this formula and is now one more group that is very concerned about future federal budgets cuts as the U.S. deficit is increased simply to pay for GOP tax cuts.

Defense News reports that the U.S. defense industry is asking Congress “to avoid adding to the deficit because companies are fearful that higher deficits will encourage cuts to defense spending in the long run.”

The core issue that the defense industry brings up is exactly the same concern various other groups across North Carolina and America have brought up regarding the future budget cuts to Pell Grants and student loans, Medicaid, Medicare, food assistance through SNAP, Social Security Disability Insurance, and housing assistance – just to name a few.

As we stated back in March, when the White House released its first budget blueprint:

“The recipe of what has truly made America great over time has been its ability to prioritize effectively various policies, including security, in order to serve all Americans and provide for a more prosperous future that considers a wide array of current and emerging issues.”

As it relates to the federal budget and the proposed GOP tax plan, the ultimate question for the president and Congress at this time is: Which of the following is more important?

  1. Tax cuts for the wealthiest and most profitable corporations; or
  2. Investing in our security and the building blocks that promote thriving communities in this country

Based on the choices that the president and Congress have made recently, Americans across the country need to make their voices heard now to help them choose the answer that will strengthen our country not hurt it.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

 

NC Budget and Tax Center, Trump Administration

As Congress rushes to pass tax legislation, consider the impact to NC’s state and local taxes

Congress is very close to giving a tax bill to President Trump by the holidays that would allow the wealthiest to pay less in taxes and result in a bad deal for everyone else.

As Congress rushes to make all of this happen, it is important to know that the tax framework released by President Trump and Republican leaders contains proposals that will not only put the federal budget on a path to higher deficits, but will also worsen the state’s fiscal health.

Here’s how: President Trump and congressional Republican leaders plan to end the federal deduction for state and local taxes (SALT). As researchers at the Center on Budget & Policy Priorities argue, the SALT deduction supports state and local budgets because it makes higher income filers, in particular, more willing to support increases in their state and local taxes because they can deduct it from their federal income tax return. Eliminating it would make it harder for North Carolinians to maintain funding for schools, roads, public safety, homeownership and other building blocks of thriving communities, at a time when the federal government would shift more of these investments to state and local governments to fund on their own. That is because the repeal of the SALT deduction is being done to pay for rate reductions that benefit the country’s wealthiest taxpayers.

In 2015, 1.2 million North Carolinians claimed SALT and the average value of the deduction was more than $9,500.

Concerns about ending SALT have been expressed by state and local government groups since the president and Congressional leaders presented their tax framework. For example, the National Association of Counties released a statement expressing major concerns:

“Counties are opposed to this $1.3 trillion federal money grab. Eliminating the SALT deduction would force undue burden upon the backs of middle-class homeowners in every state. Even if the standard deduction were doubled, middle-class homeowners would see their federal tax bills increase by an average of $815.”

Tax changes should not put at risk our state’s fiscal health and our nation’s. Instead, we should be pursuing the design of a tax code that can responsibly support the services that our communities need to thrive.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

U.S. Senate passes budget framework that slashes trillions and increases deficit. What’s next?

The U.S. Senate narrowly voted 51-49 to pass its budget resolution. Unfortunately, the budget passed by the Senate has many similarities to the House budget that was passed less than two weeks ago. Overall, this budget framework will harm millions of Americans and set our country in a downward trajectory as, over the next 10 years, it will:

  • increase the U.S. deficit by $1.5 trillion;
  • cut Medicaid by $1 trillion;
  • cut Medicare by $473 billion; and
  • slash over $4 trillion dedicated to programs for student and families such as Pell Grants and student loans, food assistance, housing assistance, income assistance for children with disabilities, social security disability insurance, and others.

Why did the senate pass this budget and what happens next?

Republicans in the Senate voted for this budget because it gets them one step closer to passing tax legislation proposed by President Trump without needing any votes from Democrats.

The latest from the House Speaker is that they intend to vote on a tax bill next month.

What does this tax plan mean for the U.S? Read more

NC Budget and Tax Center

House GOP passes budget to slash Medicaid and Medicare by $1.5 Trillion over the next 10 years

The U.S. House of Representatives has passed a federal budget for 2018 that calls for more than $5 trillion in cuts over the next 10 years to multiple important programs that help communities and working families all across America.

It also contains the latest in a series of backdoor approaches to reduce health insurance coverage for millions of Americans by proposing deep cuts to Medicaid and Medicare after the attempted repeal of the Affordable Healthcare Act was not successful. Instead of working on ways to stabilize health-insurance markets congressional leaders are now directly attempting to disrupt health care by cutting effective health care program budgets that have previously received bipartisan support and helped millions of Americans for over 50 years.

The House passed budget cuts Medicaid by $1 trillion and Medicare by more than $470 billion over the next 10 years. Medicaid provides health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities, while Medicare serves individuals 65 or older and people with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).

These drastic budget cuts mean more than two million North Carolinians enrolled in Medicaid and the 1.2 million enrolled in Medicare, as well as those that could qualify in the coming years, would be affected by eliminated and reduced services. Additionally, North Carolina’s own budget would also be affected as Congress plans to shift massive costs to the states.

So what happens next? The U.S. Senate is planning to pass its own version of the federal budget as early as next week. In the meantime, it will be important for North Carolina’s congressional delegation to stand up for our health and well-being back home. Taken together, the House passed budget and the tax plan recently proposed by President Trump would do the very opposite by reducing federal revenue by $2.4 trillion, increasing the deficit by $1.5 trillion, and giving 67 percent of the tax cuts to the richest 1 percent of Americans in 2018.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.

NC Budget and Tax Center

256,000 N.C. children are at risk of losing healthcare coverage as Congress lets federal funding for CHIP expire

Federal funding for the Children’s Health Insurance Program (CHIP), which covers about 9 million children in the U.S., has now expired because Congressional leaders did not renew its funding by Sept. 30 as required by law. The CHIP program was enacted in 1997 and provides affordable, high-quality, and consistent health care coverage for children who do not qualify for Medicaid and whose families lack access to affordable employer-based or private insurance.

Congress’ failure to renew funding for the CHIP program means over 256,000 children across North Carolina are at risk of losing their only source of health care coverage. Furthermore, this decision by Congress also spells budget trouble for our state in 2018, as our General Assembly assumed continued federal funding for CHIP in the most recent state budget and failed to take seriously proposed federal budget cuts.

North Carolina is now projected to exhaust all of its federal funds for CHIP within the first three months of 2018. In other words, our state could be one of many states facing a funding shortfall in this area if Congress does not extend federal funding.

The Kaiser Family Foundation summarizes the negative impact to families and provides a North Carolina case study from the past that shows the real world implications:

“Reductions in CHIP coverage will result in coverage losses for children and negative effects on children’s health and family finances. If states close enrollment and/or discontinue coverage for children in separate CHIP programs, some children could shift to parents’ employer-sponsored plans or Marketplace plans, but others would become uninsured. Previously, some states closed enrollment in CHIP for limited periods in response to state budget pressures, and studies show that this led to coverage losses, left eligible individuals without access to coverage, and had negative effects on health and family finances.

“In North Carolina, enrollment fell by nearly 30% from about 72,000 to 51,300 when it froze enrollment between January and October 2001. The number of children determined eligible for CHIP but placed on a waiting list grew to over 34,000. Most (60%) children added to the waiting list were previously enrolled in Medicaid and were unable to transition to CHIP.

“Enrollment freezes negatively affected children’s health and family finances. In North Carolina, parents with children affected by the enrollment freeze said their children experienced periods of being uninsured and that almost all needed care during the time that they lacked coverage. Parents often had to delay care while their children were uninsured and reported difficulties obtaining prescription medications for their children. Parents also reported that obtaining care while their children were uninsured resulted in significant financial hardships, requiring them to cut back on necessities, borrow money from family or friends, and accrue debt for missed payments on bills.”

The fact that Congress failed to act in a timely manner for such an important program affecting millions of children is unfortunate considering that a recent poll had found three-fourths (75 percent) of the general public saying it was important for Congress to work on reauthorizing funding for the State Children’s Health Insurance Program (CHIP).

The bottom line: It is critical that Congress renew federal funding for CHIP and stop political budget games that hurt vulnerable families and children across America and North Carolina.

Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.