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Taxpayer's Tab Issue #1

January 10, 2014

 

 

 

Vol. 5 Issue 1, January 10, 2014

Congress Already Revisiting Its Recently Passed Budget Deal

Congress closed out 2013 with the passage of a budget compromise crafted by Congressman Paul Ryan (R-WI) and Senator Patty Murray (D-WA). The plan set spending levels for the remainder of this Fiscal Year, thus preventing another partial government shutdown. However, the agreement eliminated $62 billion worth of spending cuts that were enacted into law in 2011, and replaced them with other savings that would be spread out over the next 10 years. As we noted, 75 percent of the new spending would occur in the first two years while three-quarters of the savings will not occur until six to ten years from now.

Besides the fact Congress has promised that it will pay for this year's spending years from now despite the massive federal deficit, one huge defect of this type of budgeting is that the savings are not locked in. The further out they are from the current year, the more tenuous they are. At anytime Congress could decide to revisit those cuts, just as this Congress did only weeks ago by canceling a portion of the cuts passed into law in 2011. And we are already seeing efforts to revise the newly-enacted law.

Below are several bills that would address the reduction in annual cost-of-living adjustments of retirement pay for certain veterans under age 62 that passed in the Ryan-Murray deal, and some bills to address an item that was explicitly left out of the compromise -- extension of emergency unemployment benefits.

Some of the bills would include offsets against the new spending -- a few of which have also been included in other legislation offered in the 113th Congress -- while others would not provide offsets.

Emergency Unemployment Compensation

According to the Congressional Budget Office (CBO), extending emergency unemployment insurance benefit payments for another three months (through March 31, 2014) would increase federal spending by about $6.56 billion. Congress has introduced proposals that would accomplish this either with or without offsets to that cost, as outlined below.

Proposals that include offsets:

H.R. 3813, the Emergency Unemployment Compensation Continuation Act, by Rep. David Cicilline (D-RI), offsets include:

  • Revenues: Amends the Internal Revenue Code to classify general aviation aircraft as twelve-year property offsets for purposes of the depreciation tax deduction (currently, expenses for aircraft can be deducted or expensed in the current taxable year). Provisions related to this were also included in H.R. 505, S. 278, and S. 817.
  • Adjusted Gross Income And Per Person Limitations On Share Of Insurance Premiums Paid By Federal Crop Insurance Corporation. Provisions related to this were also included in H.R. 1947 and H.R. 1995.
  • Payment Limitations Related To Crop Subsidies. Provisions related to this were also included in H.R. 1932, H.R. 1947, and H.R. 1995.

Proposals that do not include offsets:

S. 1845, the Emergency Unemployment Compensation Extension Act, by Sen Jack Reed (D-RI).

Additionally, Senate Majority Leader Harry Reid (D-NV) offered an amendment to S. 1845 that would extend emergency UI benefits through November 16, 2014 in exchange for extending automatic cuts to mandatory spending -- known as sequestration -- for another year. However, those additional cuts wouldn't be realized until 2024. Senator Reid's amendment would also reduce the maximum weeks of payment eligibility from 47 down to 31, and limit concurrent receipts of Social Security benefit payments. Senate sources have told the media that these provisions would offset the $26 billion cost of an 11-month extension (presumably, over the course of multiple years).

There are also measures to extend emergency unemployment benefits included in:

Military Pensions

Restore Disabled Military Retiree's COLAs

Currently, retired military personnel under the age of 62 are subject to an annual one percent reduction in the cost-of-living adjustments (COLA) made in the payment of certain benefits. Some lawmakers have introduced bills that would ensure that doesn't apply to retirees with disabilities. Based on information provided by the House Budget Committee, this would cost $573 million over ten years.

H.R. 3808/S. 1872/S. 1880, a bill to provide that the annual adjustment of retired pay for members of the Armed Forces under the age of 62 under the Bipartisan Budget Act of 2013 shall not apply to members retired for disability and to retired pay used to compute certain Survivor Benefit Plan annuities, by Rep. Chris Van Hollen (D-MD), Sen Mark Pryor (D-AR), and Sen Patty Murray (D-WA).

Repeal COLA Reduction for All Military Retirees Under 62

There are several proposals under consideration that would repeal entirely the one percent COLA reduction for retirees under the age of 62. According to CBO's estimates, doing so would require $624 million in additional spending each year (about $6.24 billion over ten years). Some of those bills include offsets; others would not.

Proposals that include offsets:

H.R. 3793/S. 1844, the Military Retirement Restoration Act, by Rep. Daniel Maffei (D-NY) and Sen Jeanne Shaheen (D-NH), offsets include:

  • Revenues: Treatment Of Foreign Corporations Managed And Controlled In The United States As Domestic Corporations. Related provisions also included in H.R. 694, H.R. 1555, and S. 250.

H.R. 3798, a bill to repeal an annual adjustment of retired pay and retainer pay amounts for retired members of the Armed Forces under age 62, and for other purposes, by Rep. Scott DesJarlais (R-TN), offsets include:

  • Reductions to the Affordable Care Act's Prevention and Public Health Fund. Related provision also included in H.R. 1099 and H.R. 1549

H.R. 3801, a bill to repeal the reductions in military retirement benefits made by the Bipartisan Budget Act of 2013 and to authorize the United States Postal Service to implement a modified Saturday delivery schedule, by Rep. Darrell Issa (R-CA), offsets include:

  • Authorize the United States Postal Service to implement a modified Saturday delivery schedule. Related provision also included in H.R. 2748 and S. 1486.

H.R. 3807, the Uphold Our Promise to Veterans Act, by Rep. Ted Poe (R-TX), offsets include:

  • Prohibition On Assistance To Egypt And Pakistan beginning in FY 2015. Related provisions included in H.R. 276, S. 1278, H.R. 1253, S. 164.
  • Authorization to sell certain federal land through FY 2024, or until the proceeds generate $3.5 million, whichever comes first. Related provisions included in H.R. 1017.

S. 1869, the Keeping Our Promise to Our Military Heroes Act, by Sen Kelly Ayotte (R-NH), offsets include:

  • Require a Social Security Number To Claim the Refundable Portion of the Child Tax Credit. Related provisions are also included in H.R. 556, H.R. 2778/S. 91, and S. 18.

Proposals that do not include offsets:

H.R. 3790/ H.R. 3804/ S. 1856, a bill to repeal the annual adjustment of retired pay and retainer pay amounts for retired members of the Armed Forces under age 62, by Rep. Jeff Miller (R-FL), Rep. Julia Brownley (D-CA), and Sen Mark Pryor (D-AR).

H.R. 3792, a bill to repeal the reduction in the annual percentage increases of retired pay and retainer pay amounts for retired members of the Armed Forces under age 62, by Rep. Robert Wittman (R-VA).

H.R. 3794, a bill to repeal the annual adjustment of retired pay and retainer pay amounts for retired members of the Armed Forces under age 62, and for other purposes, by Rep. Gus Bilirakis (R-FL).

Photo Credit: NPR, Politico

   

Changes Coming to the Tab, Thanks to You!

With the resounding end-of-year support from NTU Foundation Members, we will be able to redesign The Taxpayer's Tab and provide taxpayers more information on the proposals that will affect government spending. Thank you! Be on the look out for a sleeker, easier-to-share Tab in February.

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Missed an Issue?

Issue 43 - Dec 19
Where Could Congress Cut Spending?

Issue 42 - Dec 6
Emergency Unemployment Compensation Extension Act

Issue 41 - Nov 22
Caregivers Expansion and Improvement Act

Issue 40 - Nov 15
Community College to Career Fund Act

Issue 39 - Nov 7
10 Largest Spending and Cut Proposals So Far



About NTUF

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