Exactly one year ago I published my first blog, predicting that 2017 would be a target-rich environment for bloggers. That, of course, was a “no-brainer” and the year certainly lived up to my expectations. This is my 43rd endeavor since then but now on the cusp of a new year it’s time to look ahead.
I believe we can expect a year when almost anything can happen, including a constitutional crisis requiring resolution by the Supreme Court, a change in control of Congress and President Donald J. Trump’s resignation. Mind you, I’m not saying any of these events will occur; predicting anything in the age of Trump is a fool’s errand.
Still, there are a number of certainties that are on the horizon: Senate Majority Leader Mitch McConnell (R-Ky.) and the Republican-controlled Senate will confirm as many right-wing federal judges as possible this year. McConnell will likely change the rules to speed this process just in case the GOP loses control of the Senate in 2019.
Another sure thing is that the Tax Cuts and Jobs Act (TCJA) will cause great confusion because the Internal Revenue Service is poorly equipped to implement it. I have been following the GOP’s war on the IRS for several years but many readers are probably unaware of the damage Republicans have done to this agency.
My research was validated by a recent New York Times editorial board article. It confirmed that the IRS budget has been cut by almost $1 billion and its staff reduced by 21,000 since 2010. Another report revealed that the IRS lost 6,801 of its permanent staffers in the first nine months of this year alone. At the same time, it is processing ten million more returns with “decrepit” computers that operate using ancient technology. Worse yet, the IRS compliance staff has been cut by one-third. This means fewer audits and billions less revenue recovered from tax cheaters.
Rep. Kevin Brady (R-Texas), one of the primary authors of the new tax law, was asked about more funding for the IRS to handle the changes. He said: “[I]f they can make that case in conjunction with Treasury, we’ll listen. But the assumption’s not, we’re opening up the pocketbook.” Perhaps Brady doesn’t remember how President Ronald Reagan significantly increased IRS funding to cope with his 1986 tax reform.
Now, with precious little lead time and during its busiest four months of the year, the service must give guidance to employers in deducting withholding taxes next month and then write rules and design forms for a complete and complex overhaul of the tax code. It will be a daunting task.
No doubt tax attorneys and accountants are spending this holiday weekend scouring the new law for loopholes they can implement for their clients. Knowing that the IRS will struggle to do audits on 2018 returns, they will test the limits of the new regulations to the fullest.
The GOP tax bill was rushed through Congress, with changes made on the fly. The inevitable mistakes will cause unintended consequences requiring technical corrections and perhaps significant revisions. Complex legislation like the TCJA and The Affordable Care Act (Obamacare) always necessitates corrections. Republicans have so far refused to take any action to improve Obamacare. It will be interesting to see how Democrats react when asked to shore up the TCJA.
Regardless, I believe there will be a significant reduction in federal revenues next year and a much larger increase in the deficits than analysts have projected. This will be Speaker Paul Ryan’s excuse to cut entitlements even though McConnell seems reluctant to touch Medicare and Medicaid in an election year. Both, however, are eager to offset their tax cuts for the wealthy by cutting benefits for our most vulnerable citizens.
But entitlement reform will have to wait on other critical legislation that Republicans neglected in the panic to pass tax reform. Bills to fully fund the government and raise the debt limit, among others, must be passed by January 19. Look for a legislative free-for-all in both chambers next month.
While Congress wrestles with contentious legislation, Trump will likely retreat further into his alternative reality as the Russian investigation puts pressures on him and his family. His impromptu interview with a New York Times reporter last Thursday is a prime example.
Although Trump has frequently demonstrated ignorance of most issues, he told the reporter, “’I know the details of taxes better than anybody. Better than the greatest C.P.A. I know the details of health care better than most, better than most.” He also bragged, “I’m the one that saved coal. I’m the one that created jobs. You know West Virginia is doing fantastically now.”
The Washington Post fact-checked this interview and found that Trump made 24 false or misleading statements in just 30 minutes. But perhaps the most disturbing claim was when he said, “I have absolute right to do what I want to do with the Justice Department.” Does he mean he can fire Special Counsel Robert Mueller at will? Does he think he can order the Justice Department to terminate the Russian investigation? Perhaps we will find out before summer.
Yes, almost anything can happen this year with Trump in the White House. The big question is, how will voters react come November?
I hope your holidays were filled with happiness and that the New Year brings you good health and prosperity. Please continue to watch this space.