Education: What Republicans giveth Republicans taketh away
Your grandchildren may be among the last generation who can afford to get an advanced degree — or even, perhaps, afford to attend college — that is, unless you are a multi-millionaire who plans to take advantage of the lucrative estate tax break. House G.O.P. Tax Writers Take Aim at College Tuition Benefits, reports the NY Times.
… The sprawling House tax bill, set for a vote on Thursday [today], would tax the value of college tuition benefits conferred on thousands of university employees … , one of several provisions that would hit colleges, universities and their students, hard.
Republicans drafted the bill with the premise that it would simplify the nation’s tax code and cut rates for middle-income Americans. To help pay for the $1.5 trillion tax cut, lawmakers eliminated many individual tax breaks, arguing the overall plan would compensate for any lost benefits. The result: while many families and businesses would see tax cuts, a large percentage of undergraduates and graduate students would see their tax bills increase, some dramatically.
Check out the Times’ report for specific examples about real people.
In addition to campus employees, many doctoral students would see huge tax increases, since the tuition that universities waive for them in exchange for working on campus as researchers and teaching assistants would be deemed taxable income. At expensive research universities like Stanford and Harvard, the new tax bills could swamp graduate-student stipends.
And if students take out more loans to pay their new taxes, they would face another surprise: Under the House bill, interest paid on student loans — a deduction that more than 12 million people used in 2015 — would no longer be tax deductible.
According to the education council, more than 60 percent of the students who would be affected are in science, technology, engineering or mathematics — research fields that have drawn the praise of Republicans, including President Trump, in recent months.
And the Republicans are doing this because? Silly question. They need to come up with offsets to the cost of the tax breaks for the rich and corporations.
“These benefits ensure the brightest and best in the country can continue to afford an education,” said Steven M. Bloom, director of governmental relations for the American Council on Education, which represents 1,800 college and university presidents across the country. “Congress is sending a clear message that they’d rather use that money for corporate tax breaks.”
Welfare: Medicare will take a big hit
One of the offsets used to fund the corporate tax breaks is a Medicare cut. Republican tax plan would trigger big cuts to Medicare reports Steve Benen (MSNBC/MaddowBlog).
The federal budget deficit, which Republicans used to pretend to care about, is poised to get vastly larger if the GOP tax plan passes. There’s reason to believe, however, that Republicans will renew their interest in balancing the budget – just as soon as they’re done slashing tax rates on the wealthy and corporations.
The scope of this vision is pretty extraordinary: GOP officials have a vision of overhauling the federal tax code, redistributing wealth to the top, scrapping health care benefits for millions, and then targeting social-insurance programs like Social Security and Medicare.
And before you ask, “Didn’t Donald Trump give his word to Americans that he wouldn’t cut entitlements?” it’s important to remember the president’s rhetoric has very little to do with his actions, and he’s already endorsed some entitlement cuts, despite his commitments.
But in practical terms, we don’t really need to wait that long to see Republicans undermine popular social-insurance programs. As the Wall Street Journal reported yesterday, the GOP tax plan may very well bring about some sharp cuts sooner rather than later.
The Republican tax bill would force $25 billion in immediate cuts to Medicare, according to the Congressional Budget Office, a move that could be stopped only with a bipartisan vote.
Those are the consequences under the pay-as-you-go law [“PAYGO”] that Congress passed in 2010. That law requires tax cuts and certain spending increases to be paired with offsetting provisions. If not, the law forces automatic spending cuts…. Congress could prevent the cuts, but that couldn’t be done under the fast-track procedures they’re using for the tax bill.
… the CBO found that the legislation would increase the deficit next year by $136 billion, which means the Trump administration would have to cut spending by $136 billion.
Just to make this a little more complex, it’s worth emphasizing that a whole bunch federal programs are exempt from these cuts, including Social Security and Veterans Affairs, but the cuts would affect priorities such as Medicare and student loans. (Vox explained that cuts to Medicare “are capped at 4 percent,” which is where the $25 billion figure comes from.)
… Congress can simply vote to circumvent PAYGO and prevent unpopular cuts from taking effect, and Republicans are now saying this is what would happen to prevent Medicare cuts. But that would require approval from both chambers, including 60 votes in the Senate, where Democrats may not be in the mood to help Republicans clean up their own mess.
… if you start hearing chatter that the GOP tax plan would lead to billions of dollars in Medicare cuts, it’s not a political scare tactic. Based on the Congressional Budget Office’s own numbers, that’s a likely outcome of the Republican proposal.