Samantha Capriotti

Pelosi Plan To Expand Unemployment Subsidizes Welfare Over Work

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Posted by Tom Hebert, Samantha Capriotti on Thursday, May 14th, 2020, 6:27 PM PERMALINK

House Speaker Nancy Pelosi recently released the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, a $3 trillion wish list of liberal priorities largely unrelated to mitigating the damage caused by the Coronavirus pandemic. 

As part of this proposal, Pelosi has proposed to expand the federal pandemic unemployment compensation (FPUC) benefit. This will threaten the economic recovery by extending a program that creates an incentive for Americans to choose welfare over work. This will particularly impact millions of small businesses as they attempt to survive through the pandemic.

The FPUC is a temporary $600-per-week increase in unemployment benefits, which beneficiaries receive on top of their regular unemployment compensation. It currently runs through July 31, 2020 but the Pelosi plan would extend the FPUC through January 31, 2021. 

This program is already creating a situation in which Americans are getting paid more on unemployment than they were making in the workplace. State unemployment ranges from $235 to $795 per week, and the $600 is being offered in addition to the recipient’s state rate. $600 per week translates to $15 per hour, almost double the federal minimum wage. 

Some workers are asking their employers not to apply for a loan under the Paycheck Protection Program (PPP) so they can continue receiving the FPUC. The PPP is a federal loan program created by the CARES Act that offers businesses up to $10 million per company to fund eight weeks of payroll and other expenses. If certain criteria are met, the loans can be partially or fully forgiven.

 Jamie Black-Lewis, a Washington based small business operates two spas and was caught in between the wishes of her 35 workers and her business.  Her employees are making more money by collecting unemployment, but she needs the PPP to protect her business from further accruing debt.

In Detroit, Liz Blondy owns a dog day care that is now only operating for essential workers. She laid off 90 percent of her staff and her business has dropped by 95 percent. Blondy has applied for a PPP loan, but some workers have said that they would prefer to remain on unemployment. She told them she will not force them to come out of their homes during a pandemic, but she may not have work for them in the future.

The additional unemployment benefit will have a lasting negative impact on our economy. A recent study conducted by the Heritage Foundation found that due to the additional $600 in unemployment benefits, GDP will be reduced by between $955 billion and $1.49 trillion.  The CARES Act offers workers the ability to quit their job and opt for unemployment.  The study found that this option, coupled with the increased unemployment benefits, will lead to an additional 13.9 million people filing for unemployment.  

In reality, the UI expansion is a test run for a permanent $15 minimum wage, a long sought-after Democrat goal.  This idea has failed everywhere it has been tried.

In 2014, Seattle established a $15 minimum wage and found that in response to an average increase of pay by 3 percent, employers decreased hours by an average of 6 to 7 percent, meaning workers actually lost money.  Still, other employers reduced their existing staff and stopped hiring.  A 2017 study found that the policy was damaging to “unskilled workers” who were laid off in large numbers by employers looking for “skilled workers” since the employers would have to pay them a higher wage anyway.

Ultimately, the increased UI benefit is a disincentive to work, and is forcing employers to choose between applying for a PPP loan or shuttering completely. Of the three most recent recessions, 1991, 2001, and 2009, the labor market took an average of 51 months to recover. 

To be clear, American workers are struggling. Since the pandemic began, over 37 million Americans have filed for unemployment, a number that will continue to rise as the crisis continues. 

However, Pelosi’s plan to continue subsidizing welfare over work will only hinder the economic recovery and leave workers and businesses worse off over the long-term.

Photo Credit: Gage Skidmore

Despite Republican Progress, Congress Should Continue Working To Repeal All of Obamacare's Taxes

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Posted by Samantha Capriotti on Wednesday, March 25th, 2020, 1:49 PM PERMALINK

Ten years ago from Monday, Obamacare was signed into law on a party line vote. Since then, the law has resulted in skyrocketing premiums, billions of dollars in wasteful spending, and millions of Americans losing their healthcare plans.  

Obamacare also imposed a trillion dollars in new or higher taxes on middle class Americans and on the healthcare system. 

Many of these taxes have since been repealed by President Trump and Republicans in Congress, offering relief to families and businesses. 

Republicans eliminated Obamacare’s highly regressive individual mandate penalty, a tax that forced Americans who could not afford government-approved insurance to pay a tax ranging from $695 for individuals to $2,085 for families. 

The individual mandate tax disproportionately targeted the middle class – in 2017, 4,654,990 households paid $3,666,084,000 in individual mandate tax penalties. 74 percent of those households had annual income of less than $50,000, and 32 percent of those households had annual income of less than $25,000.  

Three other Obamacare taxes were repealed at the end of last year.  

The first was the medical device tax, a 2.3 percent excise tax on the sale of necessary and lifesaving medical devices such as MRI machines and hospital beds.  The tax reduced research and development funding by $34 million in 2013 and caused a loss of about 28,000 jobs over the three years it was in effect.   The Tax Foundation predicted this tax would reduce GDP by $1.7 billion and kill 21,390 full-time jobs over just two years. 

The second was the health insurance tax (HIT), an annual tax on insurance premiums. This tax increased costs for middle class workers, seniors, and small businesses.  The HIT was also highly regressive, with Americans earning less than $50,000 per year paying half of the tax.  If it was not repealed, small businesses would have lost 286,000 jobs, and small businesses combined with middle class taxpayers would have had to pay more than $130 billion through the tax over a decade.  

The third was the Cadillac tax, a 40 percent tax on employer-provided plans that exceed $10,200 for individuals and $27,500 for families. The tax was extremely unpopular with 81 percent of Americans in a 2018 poll stating they were opposed to it. The Kaiser Family Foundation found that if the tax were to have gone into effect in 2022, as scheduled, it would have cost families up to $3,400 annually. Repealing the Cadillac Tax was a $193 billion tax cut over the next decade, according to a recent Congressional Budget Office report.      

While Congress has made great strides in repealing some of Obamacare’s most destructive and regressive taxes, lawmakers should continue working to repeal all Obamacare taxes moving forward. There are numerous taxes still in effect that are causing harm to taxpayers and the economy.

Obamacare’s employer mandate tax requires employers to pay $2,000 per full time employee for whom the employer does not provide government approved health coverage and at least one employee qualified for a health tax credit.  According to the CBO, the mandate costs businesses $166.9 billion over ten years.  

The net investment income tax imposes a 3.8 percent capital gains tax, creating a new top rate of 23.8 percent.  The tax is also imposed on investment income, above $200,000 for individuals or above $250,000 for married filers, and for small businesses filing through the individual income tax system.  Since the tax is not adjusted for inflation, it has grown significantly since it was first imposed. 

Obamacare also imposed a 0.9 percent Medicare payroll tax on workers earning more than $200,000, or $250,000 for couples.  Over a decade, the Obamacare payroll tax costs Americans $123 billion.  

While these are some of the largest taxes still in effect, there are others on the books including the tanning tax, the Health Savings Account withdrawal tax, and the Flexible Spending Account tax.  These should all be repealed.

Congress has made tremendous progress in repealing Obama-era taxes that hurt workers, businesses, and the economy as a whole.  Congress and President Trump can build on their past successes by repealing all remaining Obamacare taxes, and improve the American healthcare system at a time when it needs relief the most. 

Photo Credit: Flickr - Matt Johnson

Senators Cassidy and Sinema Introduce a Bipartisan Paid Family Leave Plan

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Posted by Samantha Capriotti on Monday, February 24th, 2020, 11:09 AM PERMALINK

Democrats are pushing another costly entitlement that would impose onerous mandates on employers and increase taxes on American workers and businesses.  This time, the left is using the issue of paid family leave as an excuse to push this dramatic expansion of government.

There are alternative proposals for improving paid family leave, such as Senators Bill Cassidy (R-LA) and Kyrsten Sinema’s (D-AZ) plan, which can achieve this goal without raising taxes or creating new entitlements.

The Democrat plan, the Family and Medical Insurance Leave (FAMILY) Act, introduced by Senator Kirsten Gillibrand (D-NY) and Congressman Rosa L. DeLauro (D-CT), would increase payroll taxes to create an Office of Paid Family and Medical Leave within the Social Security Administration.

The Gillibrand-DeLauro plan would disproportionately harm American workers and would cost $547 billion over 10 years, according to the Congressional Budget Office’s estimates. The tax would equal 0.4 percent of a worker’s wage, split in half between employer and employee. 

Despite burdening low-income Americans with yet another left-wing tax hike, the 0.4 percent payroll tax that Gillibrand and DeLauro claim will fund their entire proposal would only raise $319 billion over 10 years, $228 billion short of the programs’ $547 billion cost, according to the CBO.  The government would need to impose a 0.9 percent payroll tax just to cover the same number of Americans that currently utilize FMLA.  

In reality, the program could require further tax increases as noted by an American Action Forum study.  According to this study, more people would utilize the FAMILY Act than currently access FMLA.  This would require an additional 2.6 to 2.9 percent payroll tax, on top of the current 15.3 percent payroll tax that funds Medicare and Social Security.

In contrast to this massive tax hike, the Cassidy-Sinema family leave plan creates an option with no tax increases or mandates. This plan, which President Trump endorsed in his State of the Union address, allows American families to take a $5,000 advance on their Child Tax Credit.

TCJA doubled the CTC to $2,000, but to offset the advancement, parents who opt in for the Cassidy-Sinema plan would accept a reduced CTC of $1,500 for the next ten years.  Parents whose employers or state already provide paid leave or similar programs would still be able to utilize existing programs, on top of the CTC advance.

While Democrats push a costly new plan that will raise taxes on low-income workers and place new mandates on businesses, the Cassidy-Sinema plan delivers the best possible relief to families without creating new bureaucracy or adverse effects down the line.

Photo Credit: Flickr - Gage Skidmore

ATR Supports Sen. Toomey's "ALIGN Act"

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Posted by Samantha Capriotti on Thursday, February 13th, 2020, 12:10 PM PERMALINK

Senator Pat Toomey (R-PA) has introduced the Accelerate Long-Term Investment Growth Now (ALIGN) Act to allow businesses to fully deduct business assets at the time of purchase, rather than depreciate them over an extended period of time.  This provision, also known as 100 percent depreciation, was created by the 2017 Tax Cuts and Jobs Act for five years, but begins to phase out at the end of 2022.

Toomey’s bill will make full expensing permanent and should be supported by all Senators.

The ALIGN Act is co-sponsored by Senators Mike Braun (R-Ind.), Shelley Moore Capito (R- W.Va.), Kevin Cramer (R-N.D.), Ted Cruz (R-Texas), Cory Gardner (R-Colo.), Jim Inhofe (R-Okla.), James Lankford (R-Okla.), Jerry Moran (R-Kan.), David Perdue (R-Ga.), Rob Portman (R-Ohio), Jim Risch (R-Idaho), Marco Rubio (R-Fla.), Tim Scott (R-S.C.), and Thom Tillis (R-N.C.).

Full expensing gives businesses a zero percent effective rate on new investments, which incentivizes more capital flowing into the economy, leading to stronger growth.  In contrast, the old system of depreciation required businesses to deduct the cost of new investments over multiple years depending on the asset they purchase, as dictated by complex and arbitrary IRS rules.

These rules create needless complexity, increased compliance costs, and could force business owners to make decisions based on tax reasons over business reasons. In fact, businesses spent over 448 million hours and $23 billion each year complying with this system when it was last in effect.

Moving to full expensing as Toomey has proposed would increase GDP by 0.9 percent, creating 172,300 additional full time jobs, according to the Tax Foundation.

Full expensing has bipartisan support.  For instance, the Obama White House supported the policy and noted that it lowers the effective tax rate which encourages businesses to increase investment, create more jobs, and lift wages.

Toomey’s bill also includes a fix to allow qualified improvement property to be immediately expensed, fixing an inadvertent error in the tax bill. While this fix is bipartisan and has strong support in both the House and Senate, Democrats have so far refused to let this proposal have a vote or be attached to a broader legislative vehicle.

Toomey’s ALIGN Act is a commonsense, bipartisan proposal that will increase economic growth and build on the success of the TCJA. All Senators should support this important legislation to make full business expensing permanent. 

Photo Credit: Gage Skidmore

Why the Wealth Tax Won't Work

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Posted by Samantha Capriotti on Friday, January 31st, 2020, 12:58 PM PERMALINK

2020 Democrat presidential candidates Elizabeth Warren and Bernie Sanders have proposed a wealth tax to fund a wish list of socialist priorities like socialized medicine and free college tuition.  

Warren plans to tax wealth above $50 million at 2 percent and above $1 billion at 6 percent.  Sanders’ plan has more tiers, ranging from 1 percent on wealth above $32 billion to 8 percent over $10 billion.  This tax diverges from the existing income tax-based system by imposing a tax annually on all assets.

A wealth tax would double the size of the IRS, increase taxes on thousands of American families, stunt economic growth, and has failed everywhere it has been tried. 

Warren’s plan would directly raise taxes on approximately 75,000 families, and Sanders’ plan would raise taxes on 180,000.  Sanders estimates that his wealth tax would raise $4 trillion over a 10-year period, while the Warren plan estimates $3.7 trillion.  According to estimates by professors Summers and Sarin, however, Warren’s plan would only raise 12 to 40 percent of the $3.7 trillion.

Although a wealth tax is nominally imposed on “the rich,” a recent American Action Forum study shows that the tax will decrease innovation and investment, driving down wages and jobs.  Over the long run, the tax will impose an effective tax of up to 63 cents on workers for every dollar of revenue raised.

Further, the wealth tax would shrink GDP by $1.1 trillion over the first ten years, and then continue to shrink it each year by $283 billion (in 2018 US dollars), or 1 percent of GDP.  In a $21 trillion economy, this quickly adds up.  

While a wealth tax would be detrimental to the economy, it is not even clear how it can be implemented.  The IRS would be responsible for keeping track of all assets, which is invasive, expensive, and difficult.  The IRS would need to pick a date to value assets, as they may change or be gifted to others throughout the year.  This would require a significant increase in resources – one analysis estimates that Warren’s wealth tax would require $5 billion in new spending, the equivalent of 80,800 more full-time IRS agents. 

The wealth tax has already failed overseas.  In 1995, 15 countries had a wealth tax, 11 of which failed and were repealed.  The countries that repealed the tax cited expensive compliance costs, distorted savings and investment, and difficulty valuing non-liquid assets as reasons for repeal.  The tax was ineffective at combating wealth insecurity and did not redistribute wealth in favor of low-to-middle income earners. 

Austria cited the enormous cost of valuing assets as its primary reason for getting rid of the tax, while Germany declared the tax unconstitutional, an issue that is still in question in America. 

France, the most recent country to abandon the tax, actually lost €7.5 billion ($8.32 billion) due to the decline in investment and the exit of 12,000 taxpayers each year.  France’s story displays perhaps the strongest argument against wealth taxes – they don’t work.

Historically, “tax the rich” proposals have a way of trickling down to the middle class.  In 1969, the Johnson administration leaked that 155 wealthy Americans paid nothing in taxes.  Congress created the Alternative Minimum Tax, then referred to as “the millionaire’s tax,” to prevent this small group from future evasion.  However, the base for this tax continued to grow each year.  By 2011, 5.2 million middle-class Americans were subject to the AMT and it was projected to hit 30 million taxpayers by 2012. 

Clearly, a wealth tax will harm Americans  in the short and long-term. Warren and Sanders’ proposals will slow GDP growth, innovation, and investment.  This would be difficult and costly to implement and has been unsuccessful everywhere it has been tried.

Photo Credit: Wikimedia

Unemployment Reaches Record Lows Thanks to GOP Tax Cuts

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Posted by Samantha Capriotti on Friday, December 6th, 2019, 5:10 PM PERMALINK

The U.S. has reached a 50-year low unemployment rate thanks to the 2017 Tax Cuts and Jobs Act.  Over the past two years, the Trump economy has continually outperformed predictions with no signs of stopping.

Since President Trump’s 2016 election, American businesses have created 7 million jobs – 5.1 million more than predicted by the Congressional Budget Office.  500,000 of these new jobs are within the manufacturing industry, a drastic improvement from the 20,000 manufacturing jobs lost the year before Trump’s election.  In November of 2019 alone, the economy added 266,000 jobs, far surpassing the expected 187,000.

The unemployment rate reached a 50-year low of 3.5 percent this September, accompanied by the highest employment in U.S. history at almost 160 million.  The number of discouraged workers decreased by 128,000 between November of 2018 and 2019.  

When President Trump was elected, only 14 states’ unemployment rates were below 4 percent.  However, 35 states’ unemployment rates fell below this threshold as of September 2019.  24 states either achieved or matched their record-low unemployment rate at some point under the Trump administration.

From 2017 to 2018, employment rose by over 2.4 million, benefitting all demographics. African American employment increased by 504,000, Asian by 384,000, women by 1.1 million, and teenagers by 52,000.  Since TCJA’s passage, unemployment rates for African Americans (5.9 percent in May 2018), Hispanic Americans (4.3 percent in February 2019), and Asian Americans (2.1 percent in June 2019) have all achieved their lowest rates in U.S. history.  Additionally, female unemployment reached its lowest rate in 71 years.

TCJA and the Trump administration have revitalized the economy with record low unemployment, steady job growth, and rising wages, all for the benefit of American workers.

Photo Credit: Flickr

2 Years In, American Workers Are Winning Thanks to GOP Tax Cuts

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Posted by Samantha Capriotti on Wednesday, December 4th, 2019, 3:57 PM PERMALINK

It has been 2 years since President Donald Trump signed the Tax Cuts and Jobs Act (TCJA) into law and Americans continue to benefit from high wages and a strong job market.  Unemployment is down, confidence in the job market is up, and small businesses are thriving.  

Here are the numbers:

Since Trump took office in 2017, American businesses have created over 6.7 million jobs.  In April, the unemployment rate hit a 50-year low of 3.6 percent, and the rate has been at or below 4 percent for 20 consecutive months.  Currently, there are 157 million Americans in the workforce and the labor force participation rate is at 63.3 percent, a stark contrast to the 40-year lows seen under the Obama administration.  

Small businesses have continued to offer more jobs with higher wages thanks to the Republican TCJA and the Trump administration’s deregulation efforts.  The NFIB Small Business Optimism index, a measurement of the confidence small businesses have in the economy, recently increased to a historically solid reading of 102.4.

Americans are confident enough in the economy and the job market to leave their jobs and search for new career opportunities.  In September 2019, there were 5.8 million job separations, 3.5 million of which were voluntary.   After leaving their jobs, Americans have access to a record-high 7 million job openings.  The ratio of unemployed persons to job openings stands at a record-low 0.9 percent, meaning there are more openings than people looking for jobs. 

The TCJA is the product of a pro-growth administration and its successes will only be amplified over time.  As a result of the legislation, 90 percent of wage earners received a tax cut.   Americans are now able to control the way a larger portion of their income is spent, saved, or invested.  In 2018, GDP grew $179 billion more than expected, and this will compound over 10 years to more than $6 trillion in growth.  Additionally, the TCJA is predicted to create 1.2 million new jobs in total by 2027.  

The results are in: the Trump administration’s winning combination of tax cuts and regulatory relief have led to record low unemployment, record high job openings, and strong growth for small businesses.

While Democrats are committed to thwarting economic growth with proposed tax hikes and $30 trillion plans for a total government takeover of healthcare, President Trump and Republicans in Congress have delivered win after win for the American worker.

Photo Credit: The Epoch Times

Four Things You Need To Know About the RSC Healthcare Plan

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Posted by Tom Hebert, Samantha Capriotti on Tuesday, November 12th, 2019, 9:00 AM PERMALINK

The Republican Study Committee recently released a framework to reform our nation’s healthcare system. The plan, entitled “A Framework for Personalized, Affordable Care,” provides a much-needed alternative to the radical government takeover of healthcare that the left is pushing. 

The left’s plan, which they disingenuously call “Medicare for All,” would kick 180 million Americans off of their private coverage overnight and require $32 trillion in new taxes over the next decade. Government-run healthcare would raise taxes on every American and lead to drastic reductions in the quality of healthcare. 

In contrast to this radical proposal, the RSC healthcare plan makes numerous improvements to the U.S. healthcare system that will ensure competition, access, and quality for every American. 

Here are four things you need to know about the RSC’s healthcare plan. 

Expands Health Savings Accounts (HSAs)

HSAs are tax-advantaged savings accounts that gives patients choice and flexibility in paying for their health needs. HSAs are double-tax advantaged: the funds are not taxed when earned as income or as they accrue interest. HSAs are used in conjunction with low premium, high deductible health insurance plans and are used by over 25 million American families and individuals. 

The RSC plan expands HSAs by allowing individuals to use them to pay their healthcare premiums. The RSC plan also expands the accessibility and effectiveness of HSAs by eliminating the requirement that HSAs be tied to a high-deductible plan. The plan also increases the HSA maximum contribution limit and expands the scope of eligible health care expenditures. 

Importantly, the RSC plan allows working seniors and other Medicare recipients to contribute to an HSA. This will end the discrimination against working seniors who cannot be on Medicare if they choose to keep their HSA.

Expands Access to Innovative, Patient Centered Care

The RSC plan expands access to innovative care for American patients in several ways. 

The framework calls for expanding direct primary care — the facetime that patients share with doctors — without raising costs. The RSC plan will allow patients to use their HSAs to pay the $60 - $70 monthly fees that fund direct primary care.  

The proposal also contains reforms that allow individuals to increase their negotiation power and receive care through economies of scale. The plan promotes health sharing ministries, which allow members of nonprofits to pool their funds through monthly dues and to only fund programs for which they would need coverage. 

In addition to these reforms, the RSC codifies the Trump Administration’s expansion of short-term, limited duration plans into law. These plans are useful for consumers in between jobs or with temporary gaps in coverage. 

Strengthens Medicaid for Future Generations 

Medicaid is on an unsustainable path. Federal spending on the program has skyrocketed from $14 billion in 1980 to a projected $702 billion in 2029. Over the next decade, Medicaid expenditures on the Medicaid expansion population alone is projected to approach $938 billion. 

To streamline the program, the RSC healthcare plan calls for a moratorium on future Medicaid expansions and a phase out of the expansion’s enhanced FMAP rate. This ends the subsidization of able-bodied adults without dependents at the expense of the truly disadvantaged –– poor pregnant women, seniors, children, and the disabled. 

The RSC plan also replaces Medicaid’s open-ended entitlement structure with separate per capita grants to better serve Medicaid’s traditional beneficiaries. The plan allows for Medicaid to combine the Children’s Health Insurance Program with the Medicaid grant for children. A flex-grant would also allow states to subsidize the healthcare of low-income individuals, subject to work requirements. 

Protects Pre-Existing Conditions and Enhances Healthcare Portability

Healthcare portability — the ability of an individual to carry their healthcare protections with them — is a cornerstone of the RSC’s healthcare plan. Portability is essential to preventing breaks in coverage for individuals, where an individual could develop a condition that would serve as an impediment to getting reinsured. 

Most importantly, portability is a protection against individuals being denied coverage because of pre-existing conditions. The RSC plan provides a legal framework to ensure that coverage protections are portable. 

The RSC plan ensures that individuals that move from the employer marketplace to the individual marketplace do not need to exhaust COBRA coverage before entering the market with portability protections. The RSC plan also ensures that individuals seeking coverage in the individual marketplace could not be refused a plan due to health status, medical condition, claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, or disability.

Photo Credit: Güldem Üstün

ATR Supports Rep. Hern's "Pro-Growth Budgeting Act"

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Posted by Alex Hendrie, Samantha Capriotti on Friday, November 1st, 2019, 9:00 AM PERMALINK

Congressman Kevin Hern (R-Okla) today introduced the “Pro-Growth Budgeting Act,” legislation that will require dynamic scoring of major-sized legislation.  Americans for Tax Reform urges all members of Congress to support Rep. Hern's bill. 

Dynamic scoring allows policymakers to forecast the effects of fiscal policy based on the predicted behavior of people and organizations. Dynamic scoring takes into account multiple estimates on a bill’s effect on employment, GDP, investment, labor supply, interest rates, and other major economic indicators.

This legislation requires the Congressional Budget Office (CBO) to use dynamic scoring to assess the fiscal impacts of any major-sized legislation in addition to the 10-year static score that CBO already releases.

All legislation that affects revenue, spending, deficits, or debts above 0.25 percent of current projected U.S. GDP is subject to dynamic scoring under Rep. Hern's legislation. If a bill does not reach the 0.25 percent threshold, The House Budget Committee Chairman and Ranking Member can still request an analysis. 

The CBO would be required to disclose its data sources and transformations and the models it used to determine the dynamic score.  This provision increases transparency and ensures that lawmakers are receiving reliable, unbiased information.

Dynamic scoring gives policymakers a more detailed picture of the economic impacts of legislation. For example, when forecasting the economic impact of raising the marginal income tax rate, the static score would assume that the government would raise more revenue with no distortions. 

A dynamic score would rightly take into account that the tax would create a disincentive to work. 

Static scoring has impeded lawmakers from considering the full effects of legislation in the past. Ignoring real-world economic indicators led the CBO to estimate that the Taxpayer Relief Act of 1997 would only create $120 billion in revenue over six years.  Once implemented, the legislation generated $2.52 trillion in revenue, surpassing the CBO’s static estimate by $2.4 trillion.

Ignoring the real-world economic impacts of legislation can lead to bad policymaking because the full impact that legislation has on the U.S. economy is not considered.

Congressman Kevin Hern's proposal rightly corrects this by making dynamic scoring available so that lawmakers can consider the full macroeconomic impact of major legislation.

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5 Reasons Why Congress Should Pass USMCA

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Posted by Samantha Capriotti on Tuesday, October 22nd, 2019, 9:00 AM PERMALINK

 The United States-Mexico-Canada Trade Agreement (USMCA) is a commonsense update to the 25-year-old NAFTA, will benefit American workers and businesses, and is widely popular among stakeholders in all three nations. 

The agreement was finalized almost a year ago on November 30, 2018, yet Democrats continue to sit on their hands and have so far refused to put the agreement to a vote. This is despite Mexico already ratifying the agreement and Canada waiting for the U.S. Congress to act.

Rather than focusing on investigations and impeachment, Speaker Pelosi should bring the USMCA up for a vote.  

Here are five reasons why Congress should pass the USMCA:

1. The USMCA will grow the economy 

The trade agreement will increase wages, increase GDP by $68.2 billion, and create 176,000 jobs, according to the International Trade Commission’s report.  It will also increase U.S. exports to Canada by $19 billion, and to Mexico by $14 billion.  

These positive economic effects are identical to a 4% cut to the corporate income tax, as estimated by the Tax Foundation.  

The Trump administration has already achieved economic successes through international and domestic policies.  Thanks to the 2017 Tax Cuts and Jobs Act and more broadly, deregulatory efforts, wages are increasing 3.4 percent annually, poverty has declined 11.8 percent, and unemployment is at a 50-year low.  Since the 2016 election, the Trump administration has created 4 million jobs and the median household income is at the highest level in U.S. history.

President Donald Trump and Japanese Prime Minister Shinzo Abe signed a trade deal last month that reduced or eliminated most tariffs between the U.S. and Japan.  In addition, President Trump and Chinese President Xi Jinping have achieved a Phase 1 trade agreement, which doubles China’s annual purchase of U.S. agriculture, improves intellectual property rights, and halts the planned 30 percent tariffs on Chinese imports.

The economy is moving in the right direction and the USMCA will further these successes by promoting trade with the U.S.’s largest trading partners.

2. There is broad support for USMCA

USMCA has broad support from Mexico, Canada, and U.S. stakeholders:

  • President Donald Trump has called it the “largest, most significant, modern, and balanced trade agreement in history,”
  • Canadian Prime Minister Justin Trudeau, a member of the centre-left Liberal Party of Canada, said it is “essential for businesses, families, jobs, entrepreneurs, and hardworking people in every corner of our country.” 
  • Mexico ratified the agreement almost unanimously with a 114-4 Senate vote.  Mexico even passed a labor law in April that strengthens independent unions to address concerns raised by U.S. Democrats – a key step for U.S. ratification. 
  • Mexican President Manuel López Obrador, a member of the left-wing National Regeneration Movement Party said, “We think it suits us, that it is beneficial for more foreign investment,” adding that the new trade accord would help create more well-paying jobs in Mexico.
  • The U.S. Chamber of Commerce Chief Executive Thomas Donohue said, “If we came up with a good strong vote on that (USMCA), it would give us a great step forward,” adding his belief that Congress had “enough votes to do it right now.”
  • The Washington Post said in an editorial that passing USMCA will “help stabilize the global economic outlook” and predicted if Pelosi would bring the agreement to the floor, it would pass both houses of Congress.
  • Senate Majority Leader Mitch McConnell (R-KY) and House Minority Leader Kevin McCarthy (R-CA) labeled the agreement, “unambiguously a win for America. It would create new jobs, expand export markets, strengthen protections for workers, and generate billions of dollars in new prosperity,” in a co-authored Wall Street Journal op-ed.

3. USMCA helps farmers, manufacturers, American workers and business

USMCA aids small and medium-sized enterprises, grants broader market access for all three countries, and benefits agricultural producers and manufacturers.  

The agreement establishes the first small and medium-sized enterprises chapter in a U.S. Trade Agreement, which will increase transparency, accountability, and investment opportunities.  International trade supports nearly 39 million jobs (1/5 of U.S. jobs), 12 million of which rely on Canada and Mexico, according to a Business Roundtable study.  These numbers have doubled since NAFTA was signed.  

This number will only increase with ratification of USMCA.

The increased market opportunities for Americans will also increase agriculture exports by more than $314 million.  Through USMCA negotiations, Canada agreed to open market access to American farmers who wish to sell dairy, poultry, and eggs in Canada.  In return, Canada will have access to American dairy and peanut products.  A combination of poor weather conditions and the trade war with China has damaged the agricultural industry.  The industry would benefit from stabilization of international markets, especially the U.S.’s two biggest trading partners that buy close to 2/3 of U.S. agricultural exports.  

Already, the Trump Administration has created over 400,000 manufacturing jobs since the 2016 election, and manufacturing jobs are growing at the fastest rate in over 30 years.  The National Association of Manufacturers (NAM) released a supportive statement in which they say, “By securing the relationship with our North American allies, we are also better positioned to demonstrate a strong and united front against China’s unfair trade practices and end the harm they inflict on manufacturers in America.” 

4. USMCA modernizes and updates a 25-year-old agreement

When the North American Free Trade Agreement (NAFTA) was agreed to in 1994, the world was a dramatically different place. For one, the internet was in its infancy. Additionally, trade within North America was greatly hindered by high tariffs and investment barriers.

Billions of dollars are traded over the internet daily, yet NAFTA does not contain any relevant provisions. USMCA establishes numerous provisions on e-commerce, cross-border data flows, encryption and IP protection that are needed in today’s digital economy.

Before NAFTA, Mexico placed an average of 250 percent more tariffs on U.S. exports than the U.S. did on Mexican imports.  Ratifying NAFTA eliminated tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico.   Facilitating free trade benefits all three states’ economies, but NAFTA does not address current trade problems.

USMCA will maintain and improve the border free trade that NAFTA began, while also establishing provisions necessary for 21st century trade.

The fact is, the global economy has changed. U.S. trade policies need to reflect that.

5. USMCA is crucial for swing states

Not only is the USMCA good for the economy and popular amongst a wide array of stakeholders, it is also a political winner.

31 of the districts Trump won in 2016 now have Democrats in the House, meaning reaching these constituents is important both for the future of the House and for the 2020 presidential election.

Looking towards the upcoming election, swing states are largely invested in international trade.  In 2018, the fourteen swing states alone were responsible for 150.7 billion dollars in exports to Canada and Mexico.  This includes Michigan, Florida, Wisconsin, and Pennsylvania, all 2012 Obama victories turned Trump victories in 2016.

For example, Michigan traded 36.1 billion worth of exports to Canada and Mexico in 2018.  More than 117,400 Michigan jobs rely on this trade.  In Ohio, more than 102,700 jobs rely on this trade and its 2018 Canada and Mexico exports totaled 27.9 billion. Pennsylvania traded 15 billion worth of exports, and 42,900 jobs in the state rely on trade with Mexico and Canada.

More than 2 million American manufacturing jobs depend on trade with Canada and Mexico.  A win for these hardworking Americans could be the moving factor in 2020.

Photo Credit: Flickr