WASHINGTON, Dec. 16, 2015 /PRNewswire-USNewswire/ -- Despite their frequent expressions of concern about the federal debt, lawmakers are pursuing a plan that would add hundreds of billions of dollars to the debt over the next decade by extending some tax breaks, making others permanent, and delaying a tax that is a key cost-control provision of the Affordable Care Act (ACA).
"This may be the season for generosity, but not fiscal lunacy," says Concord Coalition Executive Director Robert L. Bixby. "The $680 billion giveaway that would come from this legislation is money that Congress has counted on all year to make its budget numbers work. Now, Congress seems poised to enlarge the debt while violating both its own budget and pay-as-you-go (PAYGO) rules. The contrast between fiscal responsibility rhetoric and the reality of this package is quite remarkable."
Year after year, Congress has renewed various tax breaks, known as "extenders." Many of them function much like outright spending programs, subsidizing certain individuals, businesses and activities. But the extenders tend to receive little scrutiny, and unfortunately lawmakers again haven't bothered to find ways to offset the lost revenue.
This means the government would have to borrow more in the years ahead, adding to a debt that is already quite high by historical standards and on an unsustainable path. The estimated price tag: $680 billion over the next decade, not including interest.
"This year Congress is raising the stakes by delaying for two years the 'Cadillac tax' on high-cost health insurance that is supposed to take effect in 2018," Bixby said. "This is particularly ill-advised because it removes an important incentive for businesses to care about excessive health care spending and it sends a signal that the ACA's primary cost-control initiative is on the chopping block."
Congressional negotiators also agreed to delay a couple other taxes that were put in place to help pay for the ACA: a tax on medical devices and a tax on health insurers. The lost revenue from all three ACA tax delays is estimated at $36 billion.
The tax extenders move in the opposite direction from comprehensive tax reform, which many lawmakers in both parties say they want. Congress should be focusing instead on overhauling the tax code to make it simpler, more efficient, and more supportive of economic growth and deficit reduction.
The tax legislation is being voted on this week together with long-overdue spending plans for the current fiscal year, which began Oct. 1.
The Concord Coalition is a nonpartisan, grassroots organization dedicated to fiscal responsibility. Since 1992, Concord has worked to educate the public about the causes and consequences of the federal deficit and debt, and to develop realistic solutions for sustainable budgets. For more fiscal news and analysis, visit concordcoalition.org and follow us on Twitter: @ConcordC
SOURCE The Concord Coalition