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Yahoo
13 hours ago
- Business
- Yahoo
Why The 'One Big Beautiful Bill' Is Trump's Best Chance To Influence Fiscal Policy This Year
Fiscal policy in the second half of 2025 will be dominated by the fate of the "One Big Beautiful Bill" tax and spending bill being debated in Congress. The bill will make sweeping changes to the federal budget, including extending the 2017 Tax Cuts and Jobs Act and reducing spending on Medicaid. Members of Congress have imposed a July 4 deadline to pass the bill, but face a major second half of 2025 could start off with a bang for fiscal policy as Congress faces a July 4 deadline to pass the "One Big Beautiful Bill" tax and spending bill. President Donald Trump pushed for the Republicans to pass the reconciliation bill by next week in time for Independence Day, warning senators not to go on vacation until it's passed. The bill, a version of which was passed by the House of Representatives last month, extends Trump's 2017 tax cuts which were set to expire at the end of the year and introduces other tax breaks. It also cuts spending on SNAP food aid and Medicaid, the government's health insurance program for people with low incomes. Estimates have found it would add trillions to federal spending deficits over the next 10 reconciliation bill represents the biggest opportunity for the Trump administration to change fiscal policy over the course of the year. Republicans only have a 53-47 majority in the Senate, meaning Democrats have enough votes in that chamber to block most other legislation using the filibuster rule. Reconciliation allows bills to avoid the filibuster, but can only be used once a year, and has other restrictions. The bill faces some obstacles to passage. Several Republican senators have said they are skeptical of the legislation because of its cuts to Medicaid, according to reporting by The Hill. The bill in its current form is unpopular: a Fox News poll conducted in mid-June showed 59% of U.S. adults opposed it while only 38% supported of Friday, the bill was undergoing major overhauls, and its passage by July 4 was far from certain. In one major change this week, the Senate's Parliamentarian, a nonpartisan advisor, said the reconciliation bill could not include several provisions, including one of the proposed Medicaid cutbacks. Trump, speaking to reporters at a press conference Friday, said the Independence Day deadline was "not the end all" but that he would like to have it done by the deadline. Trump has reportedly been calling individual senators, encouraging them to quickly pass the the Senate passes its version of the bill, the next step would be for the two chambers of Congress to hammer out the differences and put the final version on Trump's desk to sign. The administration does have several other ways to influence fiscal policy this year. The White House is pushing for spending rescissions, clawing back money that Congress previously authorized to be spent, which can also be done without being subject to a filibuster. Trump and his DOGE cost-cutting task force have canceled programs and contracts and virtually shut down entire departments without approval from Congress. This rescission bill would essentially allow Congress to approve some of those reductions. However, opponents have challenged many of the unapproved cuts as unconstitutional, and legal cases are proceeding through the courts. Read the original article on Investopedia
Chicago Tribune
a day ago
- Business
- Chicago Tribune
Editorial: Trump's Opportunity Zones could help small businesses and struggling neighborhoods
There's plenty not to like about President Donald Trump's 'Big Beautiful Bill' now being hashed out in the Senate, not least of which is that it would enlarge the national debt. But at least one part of the budget bill stands to help the less fortunate, while still bringing smiles to the faces of the investor class. Introduced in Trump's 2017 Tax Cuts and Jobs Act, Opportunity Zones offer generous tax incentives for private investors who put money into low-income communities across the country. The 2025 bill is shaping up to provide a revised, 2.0 version of O.Z.s, as they're known to their pals. And if the Senate gets its way, as seems likely, the bill not only will update and renew the program, but will also make it permanent. The program is far from perfect, and the political left has complained that it's just another tax giveaway to the rich. But the program's flaws did not deter the city of Chicago and the state of Illinois from participating in it by identifying a slew of economically distressed communities ripe for O.Z. investment. We suspect that Trump's local critics will grudgingly embrace a new O.Z. program if it becomes a permanent feature of the tax code. After all, other tools for combating disinvestment in poor communities haven't exactly worked wonders. This somewhat technical part of the 'BBB' could turn out to be a win for Chicago's South and West sides, as well as struggling suburbs and the deep-red rural areas. O.Z.s were introduced after a bull market in real estate, stocks and bonds left many wealthy investors with profits to reinvest. Those investors were permitted to delay or eliminate paying taxes on capital gains by rolling their profits into needy parts of the country to develop real estate or build businesses. Among the 50 states, more than 8,000 census tracts were eligible for the reinvested profits under the program. That included swaths of rural Illinois, as well as struggling spots such as Dolton. That's right, Pope Leo XIV's childhood home, is in a south suburb eligible for O.Z. investments. Even many defenders conceded the program didn't fully work as planned. Most O.Z. money went into building new residential real estate, especially multi-family housing. That's good news, as it helps to address the nationwide shortage of affordable homes. But less funding than expected went into other types of real estate projects and still less into creating jobs at new or revived businesses. Also, predictably, investors directed their funds into zones that were economically better off than others. It's obviously more prudent to put money into a development that serves a low-income population but also has resources and growth around it. Still, who would gripe about a rundown part of an otherwise prosperous area getting a little help from private investors? As it turns out, plenty of people griped. O.Z.s, their critics say, have failed to encourage investment in the most impoverished areas, and too much of the investment may well have happened anyway, without the tax incentive. In practice, the law has allowed windfall tax benefits for building pickleball courts and luxury condos as well as for low-income apartments. Further, O.Z. investments have mostly failed to bring new, attractive jobs to the residents of poverty-stricken areas. And after the housing stock improves, gentrification sometimes pushes out residents the program was supposed to help. You know that old saying about Democracy being the worst form of government except for all the others? O.Z.s are similar. They were never going to be a magic bullet for eliminating poverty, but they're better than many of the alternatives. A research study published earlier this year found that O.Z. housing has cost taxpayers about $26,000 per unit, a fraction of the cost for government-built affordable housing. Remember, Mayor Brandon Johnson's Fifth City Commons project $884,000 per taxpayer-subsidized rental unit. And evidence shows the program has increased housing availability in places that need it, although not necessarily the ones that need it the most. The push to renew O.Z.'s has an influential champion in Idaho Republican Sen. Mike Crapo, who chairs the Senate Finance Committee, and it strikes us as a ray of sunshine compared to so much else in the fiscally irresponsible GOP budget bill. We'd like to see the 2.0 version of O.Z.s provide more incentives to help the poorest of the poor communities, and water down proposed rules that would overly favor rural America. But if O.Z.s can create housing in neglected areas that otherwise would get hardly any attention and do it at a lower cost to taxpayers than alternatives, bring 'em on.
NBC News
a day ago
- Business
- NBC News
The child tax credit could be worth over $2,000 under Republicans' spending plan—but millions of families wouldn't benefit
Both the House and Senate versions of the budget reconciliation bill include an increase to the child tax credit, but the House's version gives a larger payout to families. The child tax credit is a partially refundable tax credit available to taxpayers with children or dependents under age 17. Parents and guardians earning $200,000 a year or less are eligible to claim the full $2,000 credit per child through tax year 2025. Without new legislation, that limit will revert to $1,000 per qualifying child after the expiration of the 2017 Tax Cuts and Jobs Act in 2025. Congress is trying to increase the maximum credit amount through its budget reconciliation process, but the chambers differ on proposed maximum amounts. The House proposal would increase the maximum credit to $2,500 per child, while the Senate's version provides up to $2,200 per qualifying dependent. Under the House's plan, the $2,500 limit would remain in place until 2028, then drop to an estimated $2,100 and be indexed for inflation in subsequent years, according to the Tax Policy Center. The Senate's plan would also adjust the maximum credit amount for inflation after 2026. Both proposals keep the maximum refundable portion of the credit at $1,700. Regardless of the bill's final maximum credit figure, an estimated 17 million children still wouldn't qualify for the full benefit, according to an analysis by the Center on Budget and Policy Priorities. That's because the child tax credit isn't fully refundable. As of 2025, families who who don't owe income taxes and earn less than $2,500 cannot claim any portion of the child tax credit. Those earning more than $2,500 may qualify for the additional child tax credit — the refundable portion of the credit worth up to $1,700. Families with incomes over $2,500 can receive up to $1,700 as a refund if the rest of the child tax credit covers their tax liability. Around 2 million children don't currently qualify for any of the child tax credit because their families earn less than $2,500, according to the Tax Policy Center. Another 15 million receive some, but not the full credit, because their families make more than $2,500, but not enough that their income taxes exceed the amount that enables them to claim the full credit. New and continuing restrictions on who can claim the child tax credit Both the Senate and House proposals for the child tax credit would continue a restriction introduced in 2018 that requires children to have Social Security numbers in order for their families to be able to claim the credit. Around 1 million children lost their eligibility when this rule went into effect in 2018, according to the Tax Policy Center. The House proposal would also require both parents to have Social Security numbers to claim the benefit, while the Senate's proposal would only require one parent to have one. Currently, married couples who file separately can still claim the child tax credit for eligible children and dependents, but the House proposal would end that eligibility while the Senate's plan would keep it in place. The number of children with SSNs who don't receive the maximum child tax credit benefit would grow from 17 million to over 26 million under the House's proposal, according to Tax Policy Center estimates. have the support needed to pass the bill as is. President Donald Trump is pushing to see the bill sent to his desk by July 4, which Senate Majority Leader John Thune (R-S.D.) has said will happen.
CNBC
2 days ago
- Business
- CNBC
The child tax credit could be worth over $2,000 under Republicans' spending plan—but millions of families wouldn't benefit
Both the House and Senate versions of the budget reconciliation bill include an increase to the child tax credit, but the House's version gives a larger payout to families. The child tax credit is a partially refundable tax credit available to taxpayers with children or dependents under age 17. Parents and guardians earning $200,000 a year or less are eligible to claim the full $2,000 credit per child through tax year 2025. Without new legislation, that limit will revert to $1,000 per qualifying child after the expiration of the 2017 Tax Cuts and Jobs Act in 2025. Congress is trying to increase the maximum credit amount through its budget reconciliation process, but the chambers differ on proposed maximum amounts. The House proposal would increase the maximum credit to $2,500 per child, while the Senate's version provides up to $2,200 per qualifying dependent. Under the House's plan, the $2,500 limit would remain in place until 2028, then drop to an estimated $2,100 and be indexed for inflation in subsequent years, according to the Tax Policy Center. The Senate's plan would also adjust the maximum credit amount for inflation after 2026. Both proposals keep the maximum refundable portion of the credit at $1,700. Regardless of the bill's final maximum credit figure, an estimated 17 million children still wouldn't qualify for the full benefit, according to an analysis by the Center on Budget and Policy Priorities. That's because the child tax credit isn't fully refundable. As of 2025, families who who don't owe income taxes and earn less than $2,500 cannot claim any portion of the child tax credit. Those earning more than $2,500 may qualify for the additional child tax credit — the refundable portion of the credit worth up to $1,700. Families with incomes over $2,500 can receive up to $1,700 as a refund if the rest of the child tax credit covers their tax liability. Around 2 million children don't currently qualify for any of the child tax credit because their families earn less than $2,500, according to the Tax Policy Center. Another 15 million receive some, but not the full credit, because their families make more than $2,500, but not enough that their income taxes exceed the amount that enables them to claim the full credit. Both the Senate and House proposals for the child tax credit would continue a restriction introduced in 2018 that requires children to have Social Security numbers in order for their families to be able to claim the credit. Around 1 million children lost their eligibility when this rule went into effect in 2018, according to the Tax Policy Center. The House proposal would also require both parents to have Social Security numbers to claim the benefit, while the Senate's proposal would only require one parent to have one. Currently, married couples who file separately can still claim the child tax credit for eligible children and dependents, but the House proposal would end that eligibility while the Senate's plan would keep it in place. The number of children with SSNs who don't receive the maximum child tax credit benefit would grow from 17 million to over 26 million under the House's proposal, according to Tax Policy Center estimates. The proposal is currently up in the air with conflicting reports on whether Senate Republicans have the support needed to pass the bill as is. President Donald Trump is pushing to see the bill sent to his desk by July 4, which Senate Majority Leader John Thune (R-S.D.) has said will happen.
The Hill
2 days ago
- Business
- The Hill
What's the Democrats' problem? It's the spending, stupid.
After four years of crisis-level spending, Democrats now worry about deficits and debt. Strange, isn't it? The Democrats' selective attention shows clearly that their priority is not deficits and debt but preserving bloated spending and raising taxes to pay for it. Democrats have seized on a looming 2026 increase in tax rates as their baseline, instead of today's tax rates, which were lowered by the 2017 Tax Cuts and Jobs Act. By so doing, they argue that not allowing tax rates to increase above today's levels is a deficit and debt increase. From the Democrats' point of view, tax rates going up (as they will in 2026 for average American taxpayers without legislation preventing this) equates to keeping rates unchanged. It is a neat way of transforming tax cuts that aren't into the tax hikes that will be. Such is the duplicity of the Democrats; such is the fluidity of baselines. The baseline that the Democrats don't talk about is the one that has gotten America into today's deep deficit and debt hole, and that they supercharged with spending over the previous four years. What Democrats and the Biden administration did was to make the COVID crisis their baseline for spending and keep it there. Looking at fiscal years, the Congressional Budget Office shows that in 2019, the federal government spent approximately $4.4 trillion — a sizable 8 percent increase over 2018. In 2020, COVID hit, and spending shot up 47 percent to $6.5 trillion. Under Biden, it stayed roughly there: $6.8 trillion in 2021, $6.2 trillion in 2022, $6.1 trillion in 2023 and $6.7 trillion in 2024. Crisis-level spending, even without a crisis driving it, saw Biden and Democrats run approximately $7.5 trillion in deficit spending over just four years. Subtracting actual 2019 spending from their crisis-level spending shows nearly $8.2 trillion in spending above the 2019 level, per my calculations. Such crisis-level spending put 2024 spending 52 percent over where it had been in 2019. Even when 2019 spending is adjusted annually for inflation (increasing 2019 spending by Consumer Price Index growth and then increasing each year thereafter) — an inflation that hit a 40-year high and that the Democrats' excessive spending helped to fuel — I estimated that Biden and Democratic crisis-level spending surpassed it by $6 trillion. In Biden's first year, and after I adjusted 2019 spending in each of the five years for inflation, federal spending exceeded the adjusted 2019 spending level by $1.3 trillion. Spending is the problem. Not tax revenues. Tax revenues increased in 2019 (the first year they were collected because the rate adjustments occurred in 2018, and the lower rate revenues were paid in 2019) under the 2017 Tax Cuts and Jobs Act. They barely edged down in 2020, despite COVID. They increased again in 2021, 2022 and 2024. In 2023, revenues fell when slower economic growth (following tax increases in Biden's misnamed Inflation Reduction Act), an end to pandemic policies and the expiration of certain tax provisions combined to lower them. Looking at revenues and spending versus GDP underscores that excessive spending is the culprit. A March Congressional Budget Office report showed 2024 revenues below the 30-year average by just 0.1 percentage point: 17.1 percent versus 17.2 percent. In contrast, spending was over by 2.3 percentage points: 23.4 percent versus 21.1 percent. Subtracting that 2.3 percent spending from 2024's actual deficit and the resulting deficit, I found that it would have been just 4.1 percent of GDP, exceeding the Congressional Budget Office's 30-year average of 3.9 percent by just 0.2 percentage points. Sure, it's still too high, but hardly the bloated deficits that Biden left. To make it even clearer: Inflating 2019 spending by the Consumer Price Index over the last five years, per my calculations, it would have been nearly $5.4 trillion in 2024, instead of the $6.7 trillion that it was under Biden. That $5.4 trillion would have amounted to just nearly 18.7 percent of GDP, instead of the 23.4 percent that it was. Calculating the deficit from our inflated 2024 spending level, I found that, as a percentage of GDP, it would have amounted to just 1.6 percent, less than half of the Congressional Budget Office's 30-year average. With COVID, spending increased; it should have. When COVID ended, spending should have reverted to pre-crisis levels — at least to a pre-crisis level adjusted for inflation. It did not. And it did not over each of the next four years. Democrats' crisis-level spending has created crisis-level deficits and debt. Now, they want a disguised tax hike under the guise of paying for them. To update the Democrats' 1992 campaign slogan: It's the spending, stupid. J.T. Young is the author of the recent book, 'Unprecedented Assault: How Big Government Unleashed America's Socialist Left' from RealClear Publishing and has over three decades' experience working in Congress, the Department of Treasury, the Office of Management and Budget, and representing a Fortune 20 company.
