A little over a week ago, as most of the country was focused on — and generally disgusted by— the spectacle of Washington bumbling its way into and then out of a government shutdown, Congress surreptitiously sneaked $31 billion of tax cuts into the continuing resolution that reopened the federal government.
Most of the media’s focus on the three-day shutdown was on Democrats’ demand that Congress vote on legislation to protect 800,000 Deferred Action for Childhood Arrivals recipients, known as “Dreamers,” from deportation. President Donald J. Trump announced in September 2017 that he was canceling the program. Democrats ultimately dropped their demand for a vote on DACA, paving the way for passage of the continuing resolution.
A great deal of attention also was paid to the six-year extension of the Children’s Health Insurance Program (CHIP) contained in the legislation. What did not receive much attention, however, were the three Obamacare taxes and fees that were put on hold: a tax on medical devices, the so-called Cadillac tax on employers who offer very expensive health insurance plans, and a health insurance tax. All three taxes, which were intended to offset the cost of the Affordable Care Act’s expansion of health insurance coverage to low- and middle-income Americans, have been extensively debated by Congress since the ACA became law.
The delays are not offset by spending cuts or tax increases, meaning that their $31 billion cost gets piled onto to the already fast-rising federal deficit. Fiscal conservatives who are concerned about deficits and the growing U.S. national debt decried the move.
The Republican move to delay the health insurance taxes is part of the broader GOP effort to conduct a piecemeal repeal and replacement of Obamacare. Elimination of the
Because Republicans decided to use the budget reconciliation process to revamp tax law, they were limited to $1.5 trillion in revenue losses over a decade. That meant they could not include a complete repeal of the health insurance taxes in the broader tax bill. Instead, they opted to delay their implementation. Delaying the taxes still keeps that portion of the ACA on the books, but the budgetary impact––$31 billion in lost revenue––will be felt immediately.
“When we had trillion-dollar deficits the last time, it was the result of one of the worst economic downturns we’ve seen in history. This will be completely self-inflicted,” said MacGuineas. “When the economy recovered, the deficits came down, not by enough, but this is the result purely of policies, not of a recession.
“Nobody is talking about paying for anything anymore,” she said.