|The US in Decline: How Americans See the FutureA Pew Research Center report published Thursday shows how staggeringly pessimistic Americans are about where the country is heading. “When Americans peer 30 years into the future, they see a country in decline economically, politically and on the world stage,” the report says.While 56 percent of Americans say they are somewhat or very optimistic about the U.S. over the next 30 years, the public is decidedly gloomier when asked about specific issues. Majorities of Americans predict that, by 2050, the economy will be weaker, standards of living will be lower, health care will be less affordable, the national debt will be larger and the condition of the environment will be worse. And a large majority sees a broken political system largely incapable of facing those challenges.The full 58-page report is worth a look, but here a few charts that stand out.Partisan differences on what government should do: “Among all adults, health care and increased spending on education topped the list of policies that the public believes the federal government should enact to improve the quality of life for future generations,” the Pew report says. “Yet the top-three Republican priorities – reducing the number of undocumented immigrants, cutting the national debt and avoiding tax increases – don’t even appear among the Democrats’ highest five priorities.” And three of the top five Democratic priorities aren’t on the GOP list.|
|Health care, education and national debt are top priorities: More than two-thirds of Americans say that providing high-quality, affordable health care for all should be a top priority for the government, while slightly more than half say that increased spending on education should be a primary emphasis.|
|Skepticism about the future of Social Security: Most Americans say that, in 30 years, seniors will be less prepared for retirement than the current generation. Most Americans — 74 percent — don’t want Social Security benefits to be cut in any way, and just 25 percent say that some reductions will have to be made (see chart below). But among those now in the workforce, 42 percent expect that Social Security won’t provide any benefits once they retire, while another 42 percent expect reduced benefits. Almost half of Americans (48 percent) younger than 50 expect to receive no Social Security benefits when they retire.|
|US Posts Biggest Monthly Budget Deficit EverThe federal government posted the largest monthly budget deficit in history in February, with outlays exceeding revenues by $234 billion, the Treasury Department said Friday. The fiscal gap surpassed the monthly record of $231 billion set in February 2012 and is about 8 percent larger than the $215 billion recorded in the same period last year.In the first five months of fiscal 2019, the budget deficit grew by 39 percent, rising to $544 billion, up from $391 billion in the same period a year earlier. As is typically the case, the timing of payments played a role; without the timing shifts, the deficit would have grown by 25 percent in the first five months, year over year.Tax receipts in the current fiscal year have declined less than 1 percent compared to the year before, while spending has increased 9 percent to $1.8 trillion. Corporate taxes have dropped significantly, with $59.2 billion paid so far this fiscal year, compared to $73.5 billion at this point in 2018 and $87.4 billion at this point in 2017.|
|IRS Eases Penalty for Taxpayers Who Paid Too LittleTaxpayers who had too little withheld from their paychecks in 2018 now have a little more room to breathe. Taxpayers who paid at least 80 percent of what they owe for the 2018 tax year will avoid underpayment penalties, down from the 85 percent cutoff announced earlier this year and the 90 percent threshold usually in effect.Worried that millions of taxpayers inadvertently had too little withheld from their paychecks last year due to uncertainty around the new tax rules, numerous lawmakers and accountants had pressed Treasury Secretary Steven Mnuchin for the decrease. The change will reduce the number of people who have to pay the penalty by as much as 30 percent.“Treasury is exempting even more taxpayers from the usual underpayment penalties in an effort to help those who attempted in good faith to meet their withholding obligations,” Mnuchin said in a statement. More critically, David Dayen, the incoming editor of The American Prospect, said that the adjustment “is an enormous red flag that something went deeply wrong with withholding” in the first year of the GOP tax law.|
|Winners and Losers from the GOP Tax Cuts This YearBloomberg’s Ben Steverman and Marie Patino look at some representative households to see who’s winning and who’s losing under the Republican tax cuts this filing season. While most taxpayers will pay lower taxes on their 2018 earnings, the new tax law also brought with it “a bewildering array of new rules that can have unpredictable and contradictory effects,” the authors say, resulting in surprising outcomes ranging from unforeseen tax bills to larger-than-expected refund checks.Here are some highlights from the analysis, which is presented with some interesting graphics at Bloomberg:Not much for low-income households with children: The tax law provides a $2,000 tax credit per child, which is partly refundable. However, the credit is limited to just 15 percent of taxable income over $2,500, providing a relatively small benefit for low-income households. Even with the new child tax credit, the average tax cut for households earning less than $25,000 — about 20 percent of all U.S. households — is just $60.|
Independent contractors win big: Steverman and Patino compare two households earnings $70,000, one with an employee in sales and the other an independent contractor in sales. Because the tax law eliminated the employee’s ability to deduct travel expenses, his tax bill increased. But the independent contractor can still claim that deduction and can also take advantage of the new pass-through deduction to shield a portion of her income from taxes, resulting in larger refund check. “Tax reform makes becoming an independent contractor, rather than an employee, much more attractive,” the authors write.
Blue state blues: Two families earning $150,000 fare very differently due in part to the treatment of local property taxes. A family in California can now deduct only $10,000 of what they paid in state and local taxes, resulting in a higher tax bill for 2018. A family with the same income in Missouri pays much lower property taxes and ends up with a tax bill roughly the same this year as last.
Big breaks for high-income households: Two families in Connecticut earning $350,000 each pay about $10,000 less in federal taxes on their 2018 returns. While Connecticut has high state and local taxes, the repeal of the Alternative Minimum Tax makes up for the loss of the state and local tax deduction. And both households can claim the full $2,000-per-child tax credit as a result of their high incomes.
|Senate Republicans Unveil Budget Plan to Reduce Deficits by $538 BillionSenate Budget Committee Chairman Mike Enzi (R-WY) on Friday unveiled a fiscal 2020 budget resolution that would allow automatic spending cuts set to kick in, sharply decreasing both defense and non-defense spending, while rejecting the rosy economic assumptions in the president’s budget and a gimmick it would use to boost military funding.The budget blueprint would bring spending in line with caps set under the 2011 Budget Control Act, putting defense spending at $576 billion and nondefense spending at $543 billion. Those levels represent a reduction of $126 billion from 2019 levels agreed to under a bipartisan deal last year.Here’s what else you need to know.It’s aimed at reducing the deficit: The draft, which will be voted on by the Budget Committee next Thursday, veers from past Republicans proposals by covering five years instead of 10. And rather than aiming to reach balance, as other budgets have done by using overly rosy projections and gimmicks, it proposes to trim deficits by more than $538 billion over five years and keep annual deficits from reaching $1 trillion. Under the proposal, the deficit would shrink from a projected $903 billion this year to $748 billion in 2024.“Strengthening America’s future for our children and grandchildren begins by putting our nation on a more sustainable fiscal path and reducing our nation’s deficit spending,” Enzi said.A path to $750 billion for defense: Trump’s budget, released earlier this month, called for increasing overall defense spending to $750 billion next year. But it did so by stuffing nearly $100 billion more into the Overseas Contingency Operation (OCO) fund, an off-the-books account meant for war fighting. The move, which would raise OCO funding from $69 billion this year to $165 billion in 2020, allowed Trump’s budget to technically stay within previously set spending caps due to take effect again next year. Budget watchdogs roundly criticized that as a gimmick.Enzi’s budget would provide $67 billion for the OCO fund, bringing overall defense spending to $643 billion — or about $73 billion less than 2019 levels and more than $100 billion shy of Trump’s request. But the Senate proposal would allow defense spending to rise to $750 billion under a deal to lift spending caps as long as the extra spending was offset by cuts or added revenue elsewhere.Other spending cuts: The resolution would cut nondefense spending by $54 billion compared to 2019 levels. It would slow growth in mandatory spending on programs such as Medicare by $551 billion over five years. It would also have lawmakers find $94 billion in additional deficit reduction over five years.Why it matters: The Senate, like the House, may not try to pass a budget this year, and Republicans and Democrats aren’t likely to strike an agreement over this plan. Still, Enzi’s proposal represents the Senate GOP’s opening bid in the coming negotiations over spending levels and the automatic cuts that are set to kick in again next year unless Congress lifts them once more — negotiations that could also determine whether lawmakers and the White House engage in another shutdown showdown as we approach the start of the fiscal year in October.|