Latest news with #ByrdRule
Mint
15-07-2025
- Business
- Mint
Barry Eichengreen: Germany's budget expansion makes sense while America's is reckless
Recent weeks have been momentous for government budgets in the US and Germany. In the US, both Houses of Congress passed versions of President Donald Trump's One Big Beautiful Bill, which Trump signed on the US Independence Day, 4 July. In Germany, meanwhile, Chancellor Friedrich Merz's government agreed to the outlines of a 2025 budget and a spending path for the rest of the decade. Both fiscal plans augur larger budget deficits and higher debt. But that is about all they have in common. The US budget will make permanent Trump's 2017 tax cuts and add exemptions for tip income, overtime pay and loan interest on domestically assembled motor vehicles. It will 'pay' for these provisions—if that's the right word—by cutting healthcare and food assistance for low-income households and by eliminating a range of clean-energy-related tax credits. There are so many negative things to say about Trump's Big Bad Bill that it's hard to know where to start. Also Read: Dear Trump… Nobody can glower American interest rates down To begin with, the legislation is massively regressive, combining permanent tax cuts for corporations and the wealthy with reductions in support for the poorest families. By phasing out tax credits for rooftop solar, electric vehicles and zero-emission electricity, it is a disaster for the environment. Given reductions in science funding and the addition of new taxes on universities, it is hard to imagine how it will unlock a tsunami of productivity growth in America. Moreover, the budget is fiscally irresponsible. The Congressional Budget Office, the country's non-partisan fiscal watchdog, estimates that it will increase the deficit by $3.5 trillion over the coming decade. This may not seem like a crushing burden for a $30 trillion economy. But it comes on top of a deficit that is already north of 6% of GDP, a debt-to-GDP ratio of 120% and interest rates that are high and rising. Also Read: American puzzle: Trump's tariffs have resulted in an inflation paradox The US actually has a fiscal rule that is binding in cases of congressional reconciliation, the name for the legislative process that allowed bare majorities in the House and Senate to force through the final bill. Known as the Byrd Rule, this provision prevents the use of reconciliation if the budget continues to increase the deficit, relative to the previous baseline, after the initial ten years—as the Congressional Budget Office has determined the current bill will do. The US Senate 'addressed' this problem by creatively redefining the baseline to include Trump's expiring tax cuts, making the residual increase look smaller. So much for the Republican Party's pious rhetoric about stabilizing the debt. Also Read: Will Germany under Friedrich Merz script the EU's independence from America? Germany has also relaxed its fiscal rule, but only partially and—crucially—not in a manner that threatens debt sustainability. The country's 'debt brake,' the constitutional provision that limits borrowing to just 0.35% of GDP on a cyclically adjusted basis, was amended in March to exclude both military spending in excess of 1% of GDP and a fixed package of infrastructure spending. The rationale is clear and compelling. More defence spending, for example, is needed for Germany's security, given a belligerent Russia on Europe's doorstep and the new reality that the US is no longer a trustworthy ally. Similarly, additional infrastructure investment is needed to make good on a long-standing shortfall that now threatens economic growth. Also Read: Dani Rodrik: How ideology sometimes trumps material interests Where the US budget includes $12.5 billion to upgrade air-traffic infrastructure, the German budget foresees €42 billion ($49 billion) a year over 12 years for investment in railways, roads, energy transmission and climate-change abatement—and this in an economy only a sixth of that of the US. It is not hard to see which country's fiscal strategy will have a larger impact on economic growth. But while Germany has relaxed its debt brake, and government borrowing will now increase, the provisions that remain in place will prevent German public debt from rising without limit. Critically, items still subject to the 0.35% deficit ceiling include interest payments—even interest on debt incurred to increase defence spending and upgrade infrastructure. As more debt is issued for these purposes and more interest is paid, other spending will have to be cut, or taxes will have to be raised, to meet the 0.35% limit. Also Read: Rahul Jacob: Global alliances have changed and so have German policies This will automatically stabilize the debt-to-GDP ratio, albeit at a level closer to 100% of GDP than the current 63%. But if Germany doesn't abandon the debt brake entirely, there will be no crisis of debt sustainability in which the ratio rises without limit. That's a big if. But anyone who knows Germany knows that Germans are committed, morally and politically, to debt sustainability. Relaxing budgetary austerity for good reasons such as security and long-term growth is one thing. Abandoning all fiscal common sense is quite another. Germans know the difference. Sadly, Trump's America does not. ©2025/Project Syndicate The author is professor of economics and political science at the University of California, Berkeley, and the author, most recently, of 'In Defense of Public Debt'
Forbes
10-07-2025
- Business
- Forbes
Social Security & The Big Beautiful Bill
US President Donald Trump (C) shows his signature on the "Big Beautiful Bill Act" at the White House ... More in Washington, DC, on July 4, 2025. (Photo by Brendan SMIALOWSKI / POOL / AFP) (Photo by BRENDAN SMIALOWSKI/POOL/AFP via Getty Images) So, what affect did the Big Beautiful Bill signed on July 4, 2025, by President Trump, have on the taxation of Social Security benefits-none, no changes! What started out as 'No Tax' on Social Security benefits ended up a 'No Change' on the taxation of Social Security benefits. The reason the bill did not eliminate taxes on Social Security is due to the Byrd rule, named after Senator Byrd. The Byrd rule restricts the focus of the reconciliation process to fiscal matters. Changes to Social Security are considered extraneous and not relevant in the reconciliation process. If you read the press release from the Social Security Administration, you would think this bill is the best thing since sliced bread. It has been referred to as a lie and a political statement made by the current administration. Regardless of your political view, the bottom line is nothing has changed in relation to the federal taxation of Social Security benefits. What has changed is the new Senior Bonus Deduction. Seniors 65 or older will receive an additional $6,000 deduction added to their standard deduction. For a married couple, this would mean an additional $12,000 deduction. This additional deduction is not permanent and phases out at 6% per thousand for singles between $75,000 to $175,000, a married couple between $150,000 and $250,000 and will expire at the end of 2028. The phase out provision is calculated per person. This new deduction can be taken whether you use the standard deduction, or you itemize deductions. This additional deduction cannot be specifically tied to your Social Security benefits. Granted, with this additional deduction you will have a lower tax bill overall, but not specifically lower because the taxes on your Social Security benefits were reduced. The people who will benefit from this bill are people who pay taxes and are under the phase out threshold. It is projected to save $500-$1,500 per person for middle income seniors. Who is likely not to benefit from the additional deduction? People under 65, high income seniors who will be phased out, and lower income seniors who pay no taxes on Social Security benefits. While the Big Beautiful Bill should provide lower taxes due to the additional exemption amount, lower taxes will result in less money going into the Social Security trust fund. Taxation of Social Security benefits contributed $55 billion to the trust fund. Although this amount only represents 3.9% of the total income to the trust fund, reducing this income stream will hasten the depletion of the trust fund from 2033 to 2032. The 2025 Social Security Trustees' Report projects that Social Security will be able to pay 81% of benefits being currently received. This would mean an across the board 19% reduction in your benefits. Because of the political turmoil and the potential future reduction in benefits in 2033, if Congress does not put in place policies to maintain the ability to continue paying current benefits at current rates, you may want to consider starting Social Security benefits earlier if it makes sense in your particular situation. One final thought: The new tax law provides tax planning opportunities over the next 4 years which should be explored. The ability to have more income taxed at lower rates through the new Senior Bonus Deduction is very enticing, but keep in mind, if you are on Medicare, there is an IRMAA surcharge calculated on Modified Adjusted Gross Income, not taxable income, so the tax savings you gained by proper income tax planning may be offset by higher IRMAA premiums. Remember, take the wrong benefit at the wrong time, it is usually smaller and forever.
Yahoo
05-07-2025
- Business
- Yahoo
Emanuel: Dems will be ‘fools' if they don't put midterm focus on Trump megabill
Former Chicago Mayor Rahm Emanuel in a recent interview weighed in on the passage of the 'big, beautiful bill,' suggesting it will be a major sticking point in next year's midterm elections. Asked by CNN's David Chalian if the bill will become 'the centerpiece' of Democrats' messaging, Emanuel replied, 'If it doesn't, we're fools.' 'As I've argued before, the bills should be just captured [as] 'tax cuts for the wealthy, health care cuts for the many,' he told the host of the outlet's 'Political Briefing' podcast, which aired before President Trump signed the legislation, full of his domestic priorities, into law Friday. 'People get that.' 'It's already underwater,' Emanuel added. 'There's nothing about reducing health care benefits for working people that is going to make it more popular.' The pundit also criticized the bill for being sympathetic to billionaires, giving the example of Amazon founder Jeff Bezos, who held an extravagant wedding as lawmakers scrambled to unite over the megabill. The House passed the final bill Thursday afternoon after hours of tense debate and with help from President Trump, who spoke to several GOP holdouts ahead of the crucial vote. The Senate a day earlier pushed through their own bill, after adjusting the language to satisfy the parliamentarian's Byrd Rule. Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.) had voiced optimism throughout the process that they would have the legislation to Trump's desk by July 4. While they ultimately made good on the promise, it did not come without hiccups. From internal skepticism among the GOP over cuts to Medicaid and food stamps to how it would impact the national debt to Minority Leader Hakeem Jeffries' (D-N.Y.) record-breaking 'magic minute' speech that delayed the vote, the bill faced an uphill battle. Trump took a victory lap over the bill during a speech in Iowa, calling it a 'declaration of independence from a really national decline.' On Friday, during a signing ceremony, the president echoed the sentiment. 'This is a triumph of democracy on the birthday of democracy,' he said. 'And I have to say, the people are happy.' Democrats in both chambers have made it clear that they will use the legislation — which they dubbed the 'big, ugly bill' or the 'big, beautiful betrayal' — as fodder against the GOP in the upcoming midterms, zeroing in on the health care and food assistance cuts and the rollback of green energy tax credits. Emanuel's critique comes as the former mayor, who also previously served as the U.S. ambassador to Japan, has stoked speculation in recent weeks over whether he could launch a presidential bid in 2028. 'I have something I think I can offer,' he told CNN's Kaitlan Collins last month. 'But I haven't made that decision.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The Hill
05-07-2025
- Business
- The Hill
Emanuel: Dems will be ‘fools' if they don't put midterm focus on Trump megabill
Former Chicago Mayor Rahm Emanuel in a recent interview weighed in on the passage of the 'big, beautiful bill,' suggesting it will be a major sticking point in next year's midterm elections. Asked by CNN's David Chalian if the bill will become 'the centerpiece' of Democrats' messaging, Emanuel replied, 'If it doesn't, we're fools.' 'As I've argued before, the bills should be just captured [as] 'tax cuts for the wealthy, health care cuts for the many,' he told the host of the outlet's 'Political Briefing' podcast, which aired before President Trump signed the legislation, full of his domestic priorities, into law Friday. 'People get that.' 'It's already underwater,' Emanuel added. 'There's nothing about reducing health care benefits for working people that is going to make it more popular.' The pundit also criticized the bill for being sympathetic to billionaires, giving the example of Amazon founder Jeff Bezos, who held an extravagant wedding as lawmakers scrambled to unite over the megabill. The House passed the final bill Thursday afternoon after hours of tense debate and with help from President Trump, who spoke to several GOP holdouts ahead of the crucial vote. The Senate a day earlier pushed through their own bill, after adjusting the language to satisfy the parliamentarian's Byrd Rule. Speaker Mike Johnson (R-La.) and Senate Majority Leader John Thune (R-S.D.) had voiced optimism throughout the process that they would have the legislation to Trump's desk by July 4. While they ultimately made good on the promise, it did not come without hiccups. From internal skepticism among the GOP over cuts to Medicaid and food stamps to how it would impact the national debt to Minority Leader Hakeem Jeffries' (D-N.Y.) record-breaking 'magic minute' speech that delayed the vote, the bill faced an uphill battle. Trump took a victory lap over the bill during a speech in Iowa, calling it a 'declaration of independence from a really national decline.' On Friday, during a signing ceremony, the president echoed the sentiment. 'This is a triumph of democracy on the birthday of democracy,' he said. 'And I have to say, the people are happy.' Democrats in both chambers have made it clear that they will use the legislation — which they dubbed the 'big, ugly bill' or the 'big, beautiful betrayal' — as fodder against the GOP in the upcoming midterms, zeroing in on the health care and food assistance cuts and the rollback of green energy tax credits. Emanuel's critique comes as the former mayor, who also previously served as the U.S. ambassador to Japan, has stoked speculation in recent weeks over whether he could launch a presidential bid in 2028. 'I have something I think I can offer,' he told CNN's Kaitlan Collins last month. 'But I haven't made that decision.'
Winnipeg Free Press
01-07-2025
- Politics
- Winnipeg Free Press
FACT FOCUS: Trump's ‘Big Beautiful Bill' does not let him delay or cancel elections
Social media users are falsely claiming that President Donald Trump's sprawling tax bill, which passed the Senate Tuesday after a turbulent overnight session, will give Trump undue influence over U.S. elections. 'The reason the GOP isn't concerned about the midterms and why they are pushing this bill is because it gives Trump power to cancel elections,' reads one X post. 'If this bill passes — it's the end of the country. Democracy is over.' The bill contains no such provision. Here's a closer look at the facts. CLAIM: President Donald Trump's tax bill will allow him to delay or cancel elections. THE FACTS: That's false. There is nothing in the legislation that would allow Trump, or any future president, to stop an election from going forward. According to legal experts, a constitutional amendment would have to pass for anyone to have the ability to cancel a federal election. The timing of elections for federal offices is stipulated in federal law and it is highly unlikely that Congress would pass a bill allowing the president to change that timing, experts said. 'Although President Trump might like to cancel or postpone an upcoming election if he thought his party was going to fare poorly, the One Big Beautiful Bill does not actually grant him that power,' said Barry Burden, director of the University of Wisconsin-Madison's Elections Research Center and a political science professor. White House spokeswoman Abigail Jackson called the false claims 'obviously fake news.' Burden and other experts agree that these allegations may stem from a misunderstanding of a section of the bill on judicial enforcement that was included in the version passed by the House. That section was removed from the bill after Senate Parliamentarian Elizabeth MacDonough ruled that it violates the so-called Byrd Rule, which essentially bars policy matters in budget reconciliation bills. Section 70302 could have made it easier for Trump to disregard federal court rulings, requiring parties seeking preliminary injunctions or temporary restraining orders to put down a 'security,' such as a cash bond, before the court could issue contempt penalties. Regardless, such a provision would not allow Trump to delay or cancel elections, even if he tried. 'If Trump announced, I'm canceling the elections, that has as much power as my announcing I'm canceling the elections,' said Justin Levitt, a professor at Loyola Marymount University who specializes in constitutional law and the law of democracy. Asked whether section 70302 would have given Trump power over whether elections occur, Richard Pildes, a professor of constitutional law at New York University, replied, 'Obviously not.' The U.S. Constitution gives state legislatures the power to set the time of elections, subject to any laws Congress enacts that 'make or alter such Regulations.' Congress set standard federal election dates with a series of laws, starting in 1845. That year, it was determined that states would choose presidential electors 'the Tuesday next after the first Monday in the month of November.' Presidential elections have been held every four years on this day since 1848, including through the Civil War, World War I and World War II. Congress aligned House elections with presidential races in 1872 and in 1914 aligned the election of Senators with biennial House elections. The Constitution states that the term for president and vice president is four years, the term for senators is six years and the term for representatives is two years. Unless they are reelected, there is no mechanism for any of these officials to remain in office after their term ends. Only a constitutional amendment could change this. Some states have a provision that allows voting in federal races to continue after Election Day in 'extraordinary and catastrophic' circumstances, such as a natural disaster. There is no other way to delay a federal election. Levitt explained that theoretically Congress could pass a law giving the president the power to choose when a federal election happens, but that such a scenario is 'extremely unlikely.' ___ Find AP Fact Checks here:
