A bipartisan plan to end the wasteful Employee Retention Credit program will save $70 billion. Why are lawmakers planning to spend the money on new goodies?
I agree with your main point about how Congress needs to prioritize, and one thing that’s good about prioritizing is it lets us argue about what the priorities should be.
I actually think we should prioritize the “business R&D credits” thing very highly, because it’s not actually a new hand out to business or anything. The back story here is that Congress fucked around with the depreciation schedule for certain types of expenses, including salaries (!!!), to juice the long term CBO numbers of the TCJA bill. Basically it pretends you pay out the salary over five years, rather than all at once like you actually do, creating some “profit” on paper that doesn’t really exist. No one actually thought this would ever kick in, but Congress can’t properly organize an elementary school bake sale, so it did.
The R&D credits thing is just unfucking the mess Congress created to hide its own, earlier drunken sailor esque spending.
Honestly, this just makes your point even stronger, because it shows how all the institutional incentives we’ve set up like CBO scoring and PAYGO just drive things in a bad direction.
I know this answer about Israel won’t be very satisfying, but here it goes:
Israel fights an enemy that systematically abuses Israel’s compliance with the laws of war as a path to achieve victory. There are few good reasons for Israel to abide by the laws of war in response to such an enemy if it risks losing. Israel has, in fact, largely complied with the Biden admin’s guidelines regarding its conduct of the war, despite that entailing dead soldiers (who are conscripts, not volunteers), a longer war entailing severe economic damage, and most importantly the possibility of losing (if Israel fought in Khan Younis and Rafah the way it fought in Gaza City, the war would be over already.) And that is what the $14bn in aid helps to buy. You might still not like prioritizing Gazan civilian casualties over deficit reduction, but that’s the policy rationale.
I don't disagree with anything you said, including your thoughtful explanation of why Israel aid should be a lower budgetary priority than aid to Ukraine, even if they will ultimately be bundled. I also don't take issue with your statement that the Iraq war was a "major" driver of long-term debt to GDP. I do however think it could be misinterpreted by people less familiar with federal spending in the context it was stated. Among many major drivers of the debt to GDP, increased costs of Medicare, Social Security and Medicaid are the most major drivers of the debt on the spending side. I don't say this to minimize the cost of the Iraq war. The Iraq war was indeed a bad expenditure!
Getting rid of the ERC has a very immediate function IMHO: ending those annoying radio ads by tax accounts to get you to use their service to get your ERC check.
I agree with your main point about how Congress needs to prioritize, and one thing that’s good about prioritizing is it lets us argue about what the priorities should be.
I actually think we should prioritize the “business R&D credits” thing very highly, because it’s not actually a new hand out to business or anything. The back story here is that Congress fucked around with the depreciation schedule for certain types of expenses, including salaries (!!!), to juice the long term CBO numbers of the TCJA bill. Basically it pretends you pay out the salary over five years, rather than all at once like you actually do, creating some “profit” on paper that doesn’t really exist. No one actually thought this would ever kick in, but Congress can’t properly organize an elementary school bake sale, so it did.
The R&D credits thing is just unfucking the mess Congress created to hide its own, earlier drunken sailor esque spending.
Honestly, this just makes your point even stronger, because it shows how all the institutional incentives we’ve set up like CBO scoring and PAYGO just drive things in a bad direction.
https://news.ycombinator.com/item?id=34627712
https://www.pwc.com/us/en/services/tax/library/tax-committee-announce-business-and-family-tax-relief-agreement.html
Looking forward to Saturday!
I know this answer about Israel won’t be very satisfying, but here it goes:
Israel fights an enemy that systematically abuses Israel’s compliance with the laws of war as a path to achieve victory. There are few good reasons for Israel to abide by the laws of war in response to such an enemy if it risks losing. Israel has, in fact, largely complied with the Biden admin’s guidelines regarding its conduct of the war, despite that entailing dead soldiers (who are conscripts, not volunteers), a longer war entailing severe economic damage, and most importantly the possibility of losing (if Israel fought in Khan Younis and Rafah the way it fought in Gaza City, the war would be over already.) And that is what the $14bn in aid helps to buy. You might still not like prioritizing Gazan civilian casualties over deficit reduction, but that’s the policy rationale.
Why do you place the child tax credit so low on the priority list?
Josh,
I don't disagree with anything you said, including your thoughtful explanation of why Israel aid should be a lower budgetary priority than aid to Ukraine, even if they will ultimately be bundled. I also don't take issue with your statement that the Iraq war was a "major" driver of long-term debt to GDP. I do however think it could be misinterpreted by people less familiar with federal spending in the context it was stated. Among many major drivers of the debt to GDP, increased costs of Medicare, Social Security and Medicaid are the most major drivers of the debt on the spending side. I don't say this to minimize the cost of the Iraq war. The Iraq war was indeed a bad expenditure!
https://x.com/Brian_Riedl/status/1747684419974926680?s=20
Getting rid of the ERC has a very immediate function IMHO: ending those annoying radio ads by tax accounts to get you to use their service to get your ERC check.