Treasury Secretary Steve Mnuchin recently urged Congress to raise the federal debt ceiling by August and, according to a report from Bloomberg, there's a previously unreported reason for that.
Rich Americans are apparently withholding their taxes in anticipation of receiving a big tax cut that may not ever come, moving up the debt ceiling deadline by a matter of months.
The wealthy may have deferred recognizing as much as 20 percent of their taxable income last year, according to independent estimates, a move that is legal and allows them to delay paying taxes on non-wage earnings including capital gains. Trump’s promise of tax cuts gives richer Americans “large incentives to shift non-wage taxable income from 2016 to 2017,” said Lucy Dadayan, a senior researcher at the Rockefeller Institute of Government.
Treasury’s monthly budget statement for April showed weaker-than-expected income tax receipts. The drop in tax revenue is significant enough to alarm top officials, including Treasury Secretary Steven Mnuchin, who has urged Congress to pass “clean” legislation raising the debt ceiling without policy riders by August.
I don't think anyone can say for sure Republicans in Congress will or will not ultimately pass a package of tax cuts, but I'm pretty sure it's not going to happen this year if ever.
Mnuchin has urged Congress to raise the debt ceiling by August because Congress will be in recess for the entire month and won't return until a week into September. And when Congress returns from recess, they will have just three weeks to fund the federal government for the next fiscal year beginning October 1st.
Mnuchin obviously doesn't anticipate Congress will pass sweeping tax cuts by that point any more than we do and, if Congress funds the federal government under the current baseline of revenue, the window for drastically changing the tax code will be moved to next year ahead of fiscal 2019.
It's possible our Republican-controlled Congress will pass another continuing resolution that funds the federal government through the holiday season and leave the matter unresolved. In that case, my prediction that we'll still be on an Obama budget in 2018 will come true.
Republicans finally have control over everything, but they are afraid of completely obliterating federal spending and implementing all the policies they spent the Obama years pining for. If they weren't, it would already be done.
I feel like this needs repeating:
Actor Robert De Niro tells graduates in commencement speech that they are graduating into a country that is like a "tragic, dumbass comedy.” pic.twitter.com/bGg0r6f4vC
— CNN (@CNN) May 30, 2017