Yep, it's a big week in Congress. Dems should vote on economy, not impeachment

While most political news in DC is talking about impeachment, there still is a lot of other items going on in the House of Representatives. Not the least of which is the fact that a government shutdown looms at the end of the week, so there will have to be a budget (or at least a short-term extension of current funding levels) passed and signed by President Trump by midnight Friday. And there has been some interesting bits of news on that front in recent days.

On the spending side, House and Senate leaders announced late last week that they had a framework in place that would fund the government through September 2020, although the final bill has to get through the full House and Senate.

The deal — reached just hours after a meeting between Speaker Nancy Pelosi of California, Treasury Secretary Steven Mnuchin, House Appropriations Chairwoman Nita M. Lowey and Senate Appropriations Chairman Richard C. Shelby— ends months of tense negotiations that revolved around border wall funding.

"We have an agreement on all 12 [fiscal 2020] bills," Lowey, D-N.Y., told reporters after meeting with her Appropriations counterparts....

Appropriators plan to give the Trump administration $1.375 billion for border barrier construction, significantly less than the $5 billion the White House hoped to receive in new funding for the Department of Homeland Security, but the same amount Congress approved in fiscal 2019, according to a source familiar with the negotiations.

Congress also will not backfill $3.6 billion in military construction funds that the White House diverted earlier this year to the border wall, despite the administration pushing for that funding, the source said. Trump will be able to retain his ability to transfer funding from Pentagon accounts to the border wall, the source added.

The agreement will be drafted into legislation this weekend, with the House and Senate expected to hold floor votes next week on at least two packages.

This would likely take any shutdowns off the table through the 2020 elections, a stability that will likely be good for the economy and Wall Street, but won't allow for leverage against whatever stunts and misappropriations of funds that a desperate Trump Administration might pull during these next 10 1/2 months of impeachment and a re-election campaign.

On the revenue side, the House plans to vote on provision that would modify a section of the GOP Tax Scam that caused many middle and upper-middle-class taxpayers to pay surprise checks to the IRS - the limit on the deduction for state and local taxes paid (SALT). This map from 2018 gives an indication where Americans were more likely to get hit by this SALT cap.

This was one of the motivators behind Dem gains in the House in 2018 in states like New York, New Jersey, California and Illinois, as their constituents got hit hard by this part of the Tax Scam, and the new Dem majority is looking to make changes. The biggest of these changes would give parity for two-income couples on the SALT cap, which is one of its biggest pitfalls today.

President Trump's 2017 tax-cut law capped the SALT deduction at $10,000. The bill that the House is slated to take up would increase the cap to $20,000 for married couples for 2019 and repeal the cap for 2020 and 2021.

The bill also would increase a deduction for educators' expenses and create a deduction for first responders' expenses. And it would raise the top individual tax rate from 37 percent to 39.6 percent for 2020 through 2025 to pay for the other tax changes in the bill. After 2025, nearly all of the tax provisions affecting individuals in Trump's tax law expire.

That certainly the situation that me and my wife would benefit from - our SALT total is likely to be somewhere around $15K to $16K, so we'd be under the $20K cap, but we also have enough mortgage interest and other deductions to take our totals above the $24,400 standard exemption for 2019. And I bet we're not alone.

But there is opposition to these changes among Republicans and others, and unless there's a surprising turnaround this week in the US Senate by Moscow Mitch and company, it seems like a sizable amount of Americans will be jammed by the SALT cap when they file their 2019 income taxes in the coming months.

But most Republicans defend the cap, arguing that it helps to prevent the tax code from subsidizing higher state taxes. They also argue that most residents of high-tax states are getting a tax cut under the 2017 law and that repealing the SALT deduction cap would benefit the wealthy.

The bill has also been criticized by a number of liberal think tanks, who also argue that the legislation would largely help high-income taxpayers.

That last part is intriguing to me, and an example of that criticism from liberals comes from this report from the Center on Budget and Policy Priorities. The CBPP says that removing the SALT cap would give a sizable tax break to richer Americans while it wouldn't change anything for most Americans, and wouldn't be offset by the higher tax rates on the highest incomes because the Tax Scam gave rich people so much more in tax cuts.

Repealing the [SALT] cap would be regressive and costly. The top 1 percent of households would receive 56 percent of the benefit of repeal, and the top 5 percent of households would receive over 80 percent of the benefit, while the bottom 80 percent of households would receive just 4 percent, according to the Tax Policy Center (TPC).[3] The cost of just the SALT provisions over ten years would be roughly $185 billion, according to Joint Committee on Taxation (JCT) estimates.[4] If repeal were later extended through 2025 (the last year the cap is in effect under current law), we estimate that the total cost would grow to nearly $600 billion.

Few middle-income households would benefit. The vast majority of households in the bottom 80 percent are unaffected by the SALT cap and thus would not benefit from its repeal. Fewer than 3 percent of households in the middle income quintile (those between roughly $51,000 and $88,000 in 2018), and fewer than 10 percent of households in the fourth quintile (those between roughly $88,000 and $157,000 in 2018), would receive any tax cut from repeal, according to TPC.

Higher-income households affected by the cap would still receive a large net tax cut from the 2017 tax law overall. Given the controversy around the SALT cap and the attention it has received, policymakers and many filers affected by the cap may mistakenly assume that affected filers fared poorly under the 2017 law. Both nationally and in affluent states, however, households in the 95th to 99th percentiles of the income spectrum — many of whom live in affluent suburbs and may feel targeted by the SALT cap — received the largest net tax cuts from the tax law, measured as a share of pre-tax income.

However, CBPP's figures are based on repealing the SALT cap entirely, which the current bill only does for 2020 and 2021. The organization notes that a better idea may be to make the doubling of the cap to $20,000 last beyond 2019, because that takes care of the goal of having middle- and upper-middle-class taxpayers not get hit by the cap, and doesn't increase our already-huge deficit nearly as much.

Doubling the current $10,000 cap to $20,000 for all taxpayers, for example, would cost roughly one-quarter as much as full repeal, ITEP estimates, while cutting the number of taxpayers facing the cap by more than half, from 9 percent nationally to 4 percent.

All taxpayers who now face the cap would benefit under this alternative, and the higher exemption amount would remove the cap entirely for most otherwise-affected middle-income households. The share of households in the fourth quintile facing the cap nationally would fall from 6 percent to just 1 percent. (The share of households in the 95th-99th percentiles facing the cap would fall from 68 percent to 50 percent, while the share of households in the top 1 percent facing the cap would fall from 91 percent to 84 percent.)

That type of modification seems like a logical compromise to change the bill to - give the benefits to the non-super-rich, and maybe use it as a backdoor way to reverse some of the giveaways to the super-rich that was part of the Tax Scam. Let's see where it goes this week, even if it's not likely to be in effect for this year's taxes.

But these bills indicate to me that if House Dems really want to put GOPs on the spot and make some political gains, the best option for this week isn't to rush through an impeachment vote before the Holidays. They should instead pass these bills funding the government, modifying the SALT cap, and likely passage of the USMCA/NAFTA 2.0 trade deal. This will force the Senate GOPs to talk about why they aren't taking any action over these popular measures, and would allow impeachment to marinate in people's minds over the next month.

Giving that month to let impeachment await a vote which might make Republicans look worse as the fog of GOP screeching fades and some people can get time to look at and discuss the damning facts against this crooked White House. Then House Dems can come back after the New Year starts, vote on impeachment at that time, and continue this theme of having the GOP Senate look like cover-up artists that have no interest in operating in good faith or listening to the needs of their constituents.

You know, if Dems really want to clean up in 2020 and have the landslide that we need vs operating "business as usual" in the stagnancy that has made the country backslide throughout much of the 2010s.