By Anita Estell
Recent stock market fluctuations, enactment of a tax bill that adds $1.5 trillion to the national debt, and now enactment of a budget law that increases spending and the national debt have some concerned about the potential adverse impact associated with pouring more money into an economy already showing signs of possibly overheating.
President Donald Trump signed a two-year budget deal early Friday morning, after another temporary shut-down of the federal government. The deal, which passed with bipartisan support in the US House of Representatives and Senate, increases federal spending for defense and nondefense programs, by 10 percent each, or $ 700 billion and $591 billion respectively.
Two Big Losers in the Bill:
- Dreamers. Outstanding issues related to DACA are not addressed. The program is due to expire on March 6, 2018.
- Future taxpayers. The bill produces projected historic deficits to the tune of about $1 trillion a year. The total amount (debt) the US currently owes to foreign creditors and others exceeds $20 trillion
Many Short-term Winners:
- Congress gets more time. Extends continuing resolution through March 23, 2018, providing Congress more time to keep the federal government operating.
- Spending caps busted. Spending exceeds previously established budget caps by $500 billion.
- 10 percent increase in defense spending. The law provides about $700 billion for national defense in 2018 and $716 billion in 2019, about a 10 percent increase over the $634 billion spent during the last fiscal year. Interestingly, the increase comes after the Pentagon reported having 22 percent excess base capacity.
- Nondefense spending also get “historic” 10 percent increase. These programs receive $539 billion more than the amount spent last year, bringing total spending for nondefense domestic programs to $591 billion.
- Child Health Insurance Program (CHIP). CHIP receives an additional four-year extension, protecting funding for that program now for 10 years (versus six years previously approved).
- Child Care & Development Block Grant. Receives $5.8 billion.
- Community Health Centers (CHCs). CHCs will receive about $7 billion over two years, preempting closure of about 2,600 of these centers which predominantly serve low-income persons. About 26.5 million people received services from these centers in 2016.
- College Affordability. Provides $4 billion toward college affordability programs for police officers, teachers, and firefighters.
- Infrastructure. $20 billion for infrastructure, including highways, water, wastewater, and rural broadband.
- Veterans. An additional $2 billion a year in 2018 and 2019 is provided to ease the health care backlog.
- Disaster Relief. Disaster Relief. Almost $90 billion in disaster relief for Puerto Rico, the U.S. Virgin Islands, Florida and Texas, almost double the initial Trump request. Puerto Rico will receive about $16 billion of the total. The Governor, Ricardo Rossello, has requested $94 billion.
- More tax cuts. More tax cuts. Retroactive extenders benefit green energy projects, rum producers in Puerto Rico and the US Virgin Islands, film, TV and theater production companies, deductions for private mortgage insurance and mortgage debt relief.
- Debt ceiling temporarily waived. No debt ceiling in place until after new Congress is installed, until March 1, 2019.