Latest from the Senate Floor
As of 4 p.m. ET, the Senate has not yet passed their version of the Tax Cuts and Jobs Act, but it is said to be just one vote shy of passing the bill. The Senate spent all day on Thursday, Nov. 30 voting on amendments, such as triggers to increase revenue should the economic growth forecast not keep up with what is predicted in the bill and requests to recommit the bill back to committee for significant changes. The attempts to recommit the bill failed, and many amendments to appease Republicans on the fence, such as a revenue trigger, passed, but not enough for a vote to take the bill to a full floor vote. Senators Johnson, R-Wis., Corker, R-Tenn., and Flake, R-Ariz., in a dramatic moment, stood firmly against a floor vote, causing a sudden need to regroup.
Senators stayed late into the night to rewrite parts of the bill to bring the votes they needed to pass the bill. Among the compromises expected, is an increase to the tax deduction for pass-through businesses. It is clear that the changes appeased some senators on the fence, with Senator Johnson’s office reporting the senator is now in support. It is not clear what is in the bill that GOP Senators hope to pass by the end of the day, again, setting off alarm bells at the speed and lack of transparency on such an important bill.
Consequences of the Tax Bill Becoming Law
The tax bill will add around $1.5 trillion to the federal deficit, and because the Senate is using the budget reconciliation tool, a deficit increase of this size automatically triggers spending cuts to mandatory programs. Dozens of federal spending programs could be cut, some completely eliminated, and as soon as the beginning of 2018. This is due to the 2010 PAYGO law.
The Statutory Pay-as-You-Go Act of 2010, or PAYGO, is an Obama-era update of a rule first enacted under President George H.W. Bush. It requires that legislation that adds to the federal deficit be paid for with spending cuts, increases in revenue, or other offsets.
Medicare, due to the size of the program, would take the biggest cut, with the Social Services Block Grant (SSBG) taking a close second. Temporary Assistance for Families (TANF), Medicaid, and many agricultural subsidies would also suffer from cuts. See the New York Time’s chart of cuts by federal program. PAYGO can only make cuts to mandatory programs, but the soon approaching appropriations process will likely use non-defense health and human service spending as a way to close the deficit.
It is not only spending cuts that will harm individuals, families, and communities, but changes to how the nonprofit sector raises money will jeopardize its ability to provide programs and services at a time when many will need it most. Charitable giving is predicted to diminish by almost 40 percent. Studies such as the Indiana University study show around a $13 billion loss in annual charitable giving. This is due the provision in the tax bill that doubles the standard deduction, leaving just 5 percent of itemizers able to take advantage of the charitable tax deduction.
Additionally, provisions to weaken and repeal the Johnson Amendment, a law that ensures that the entire 501(c)(3) community can be a safe haven free from partisan divisions, will also be harmful to the nonprofit health and human services sector. Keeping the Johnson Amendment in place has no fiscal impact, but repealing this provision would cost taxpayers and nonprofit organizations billions of dollars nationwide, according to the Joint Committee on Taxation. It is predicted that a repeal of the Johnson Amendment would cause charitable donations to be shifted away from human service and other nonprofits in order to support political candidates and issues through churches and partisan-leaning groups. These groups would receive a tax deduction for supporting political candidates. Not only does this redistribute giving to political will, it undermines the trust communities have in nonprofits’ mission and in their ability to serve the community equitably.
What is Next?
Should the Senate take the Tax Cuts and Jobs Act to a full floor vote and it passes, the next step is a conference committee to work out any differences between the House and Senate bills. The Senate and the House will then each have to vote again on the final passage of the conference report.
The Alliance Policy Office will be activating our strategic action network throughout the conference process, should the Senate bill pass.