The federal government usually benefits the national capital region’s economy, driving high education and wealth levels, knowledge-based employment and providing a buffer during an economic downturn. But the partial federal shutdown, already the longest ever at five weeks, illustrates the drawbacks of the concentrated federal presence in the District of Columbia (DC) metro area, a significant contributor to the larger US economy. The DC area is absorbing the worst of the federal shutdown with missed pay for employees and private sector contractors reducing personal spending and tempering tax revenue for area governments. Federal workers will miss another payday January 25. In addition, public transit ridership has slowed, and operations at other government enterprises are experiencing disruption
What would you do if management could force you to work without pay, lock you out with no consequences, and fire you for going on strike?
That’s the situation facing 800,000 federal workers—and their unions—during the longest government shutdown in U.S. history.
Forty percent of the government’s civilian workforce besides postal workers are being deprived of money to pay for rent, gas, groceries, and car and student loan payments.
They include 420,000 workers who are being forced to work without pay and 380,000 who are locked out…..
An in-depth look at how the Tax Cuts and Jobs Act of 2017 avoided scrutiny and made the rich richer.
The first part in our new series, “Trump’s Tax Cuts: The Rich get Richer,” investigating the origin and impact of the 2017 tax law:
THE TRUMP TAX LAW HAS BIG PROBLEMS. HERE’S ONE BIG REASON WHY
Source: Peter Cary, Allan Holmes, Pratheek Rebala, Center for Public Integrity, January 15, 2019
There’s no shortage of agenda items for the new Congress that’s just been seated in Washington. But lost among the anguished cries to reopen the government and enact ethics reform will be a lesser-advertised but crucial item: addressing major problems in the 2017 tax bill that President Donald Trump signed into law a year ago.
That the law needs fixing is not in dispute. Why it needs fixing is most vividly illuminated by contrasting it with another massive piece of tax legislation, the Reagan-era Tax Reform Act of 1986.
In the months leading up to passage of the 2017 tax act, Trump administration officials and Republican leaders in Congress giddily compared the scope of their bill to that very law. House Ways and Means Committee Chairman Kevin Brady, R-Texas, called their new bill, “the first action in 31 years since President Reagan’s reforms in 1986.” Then-National Economic Director Gary Cohn said the legislation represented the “most significant tax reform legislation since 1986.”
Measured by the magnitude of changes to the tax code, that is true. But in terms of how the bills were developed, deliberated and drafted by Congress — not to mention their substance — the bills could not be less alike. And therein lies an illuminating — some would say frightening — story.
The current government shutdown is now the longest on record, sidelining roughly 800,000 non-essential workers in nine agencies out of about two million full-time federal employees in all (excluding postal workers and soldiers). ….
…. The shutdown’s impact extends, Light estimates, to more than 4.1 million contract workers and grantees, as well as the hundreds of thousands of other workers. Like those non-critical workers sitting at home, contract workers, who are largely in service jobs, do not expect to be paid until Congress and the president come to an agreement to resume appropriations.
When they’ll achieve a compromise is anybody’s guess. The sticking point in this shutdown is the more than $5 billion in border-wall funding that President Trump has requested.
Meantime, fallout spreads: the appropriations freeze is bringing complications for traditional government services, from public-health inspections of food and environmental hazards to security screening.
Here, Light talks about the shutdown’s broad repercussions and if he can predict a possible end date: ….
….People living in poverty are now bracing for that kind of chopping as a result of the partial government shutdown that began in December. By the three-week mark, most safety-net benefits were still being funded. But should the impasse drag on, that could change.
Source: Federal Funds Information for States, Budget Brief 18-19, December 19, 2018
From the summary:
The second fiscal year (FY) 2019 continuing resolution (CR)—which funds the portion of federal spending not covered by full-year spending bills enacted earlier this year—will expire on Friday. While Congress just announced an agreement on another short-term CR through February 8 and the president appears to support it, the risk of a federal shutdown likely will continue until a final budget is enacted.
Should a partial shutdown occur, state officials will have questions about their ability to operate federal grant programs in the absence of a current appropriation. The answers to those questions vary by program. FFIS Budget Brief 18-17 provides answers to general questions; this brief provides targeted summary information about specific grant programs.
From the summary:
CBO periodically issues a volume of options—this year’s installment presents 121—that would decrease federal spending or increase federal revenues. CBO’s website allows users to filter options by topic, date, and other categories.
Since 2007, federal debt held by the public has more than doubled in relation to the size of the economy, and it will keep growing significantly if the large annual budget deficits projected under current law come to pass. The Congress faces an array of policy choices as it confronts the challenges posed by such large and growing debt. To help inform lawmakers, the Congressional Budget Office periodically issues a compendium of policy options that would help reduce the deficit, reporting the estimated budgetary effects of those options and highlighting some arguments for and against them.
This report, the latest in the series, presents 121 options that would decrease federal spending or increase federal revenues over the next 10 years (see Summary Table below). Of those options, 112 are presented in the main body of the report, and most of those 112 would save $10 billion or more over that period. The remaining 9 options are presented in an appendix and would generally have smaller budgetary effects…..
Source: CRS In Focus, November 19, 2018
The condition and performance of infrastructure are generally thought to be important for the nation’s health, welfare, and economy. More contentious are the optimal level of infrastructure investment, the effectiveness of this investment, and the appropriate role of the federal government. The current federal role in infrastructure investment is important but limited in size and scope.
From the summary:
Each year, CBO publishes extended baseline projections—a set of budget projections that incorporate the assumption that current laws generally remain unchanged, extending the agency’s 10-year baseline projections beyond the coming decade. In CBO’s most recent extended baseline, revenues grow more rapidly than gross domestic product (GDP), rising to levels well above their historical average, because recently enacted tax changes are scheduled to expire and because of the structure of the tax system. In addition, discretionary spending falls substantially in relation to the size of the economy. Nevertheless, federal debt held by the public rises from an amount equal to 78 percent of GDP in 2018 to 118 percent of GDP in 2038. This report expands on CBO’s extended baseline projections by showing how the federal budget and the nation’s economy would evolve under three alternative scenarios. In those scenarios, laws would be changed to continue certain policies now in place, leading to even higher debt.
From the introduction:
Since 2000, tax cuts have reduced federal revenue by trillions of dollars and disproportionately benefited well-off households. From 2001 through 2018, significant federal tax changes have reduced revenue by $5.1 trillion, with nearly two-thirds of that flowing to the richest fifth of Americans, as illustrated in Figure 1.
The cumulative impact on the deficit during this period is $5.9 trillion, including interest payments. By the end of 2025, the tally of tax cuts will grow to $10.6 trillion. Nearly $2 trillion of this amount will have gone to the richest 1 percent. By then, the total impact on the deficit will be $13.6 trillion, including interest payments.
This analysis does not include hundreds of billions of dollars in so-called tax cut “extenders” for corporations and other businesses that Congress has periodically enacted under each administration. More detailed figures are provided in the tables in Appendix I…..
Data Available for Download