GAC Congressional Update
Congressional Republicans, nursing their wounds after the bruising debate to repeal Obamacare ended in failure, look to regroup in the fall and get their legislative agenda back on track. The crown jewel in that agenda is passing a comprehensive and permanent tax reform package. But many practical and political obstacles remain in the path to the holy grail.
When Congress returns from their annual August recess after Labor Day, it will be immediately consumed by the crush of impending business that needs to be addressed in some form or fashion by the end of September. Two equally thorny issues await: funding the federal government and raising the debt limit. Congress has had significant trouble dealing with both issues in recent years and this go around should prove no exception. If any or both of these issues drag on past September – which seems likely – it will delay the timing of the tax reform debate.
At the end of July, the so called “Big 6”* secretly negotiating the tax reform package issued a joint statement. In the statement, they expressed confidence that “a shared vision for tax reform exists.” But precious little is known about the details of that shared vision. The one policy change that the Big 6 took off the table for good was the so-called border adjustability tax (BAT) that disallowed a business deduction for the cost of purchasing imported goods and services. To the extent revenue is needed to reduce the cost of the shared vision, it will now have to come from elsewhere. The Big 6 expects the tax-writing committees in the House and the Senate to begin working on the package in the fall.
Other Retirement Policy Legislation
On July 28, Congressmen Mike Kelly (R-PA, 3rd) and Ron Kind (D-WI, 3rd) introduced the Rightsizing Pension Premiums Act of 2017 (H.R. 3596). The legislation would revert single employer plan premium rates levied on small businesses with 500 or fewer employees to a flat rate of $19 per participant and a variable rate equal to .9% of unfunded vested benefits (neither amount indexed). All other businesses would have their premiums adjusted according to the Pension Benefit Guaranty Corporation’s (PBGC) funded status, which would now be based upon the rules established for private pension plans in the Pension Protection Act of 2006. The bill would also remove PBGC premiums from the federal budget for scoring purposes. Congress has repeatedly jacked up premium rates in recent years because it raises fake revenue. Should this bill become law, Congress will not be able to use PBGC premium rates as a revenue tool.
* House Speaker Paul Ryan (R-WI, 1st), Senate Majority Leader Mitch McConnell (R-KY), Treasury Secretary Steven Mnuchin, National Economic Council Director Gary Cohn, Senate Finance Committee Chairman Orrin Hatch (R-UT), and House Ways and Means Committee Chairman Kevin Brady (R-TX, 8th).
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