{"id":2321801,"date":"2024-08-09T08:19:00","date_gmt":"2024-08-09T12:19:00","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/how-smart-gop-lawmakers-should-handle-2025s-fiscal-cliff\/"},"modified":"2024-08-09T08:21:26","modified_gmt":"2024-08-09T12:21:26","slug":"how-smart-gop-lawmakers-should-handle-2025s-fiscal-cliff","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/how-smart-gop-lawmakers-should-handle-2025s-fiscal-cliff\/","title":{"rendered":"How Smart GOP Lawmakers Should Handle 2025&#8217;s &#8216;Fiscal Cliff&#8217;"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">18<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fhow-smart-gop-lawmakers-should-handle-2025s-fiscal-cliff%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2321801&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Even though it&#8217;s still 2024, many political observers\u200c in\u200d Washington are already focused\u200b on \u2064the \u2063fiscal implications of 2025. The results\u200c of the upcoming\u2064 Congressional elections will be critical, as significant budgetary changes are\u2064 expected due to expiring provisions from\u200c the 2017 tax law and expanded Obamacare subsidies\u200d that \u200cwere implemented during the last Congress. This impending &#8220;fiscal cliff&#8221; will likely dominate discussions in the new Congress starting in January.<\/p>\n<p>If Republicans, led \u200bby Donald Trump, <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-to-introduce-amendment-to-make-abortion-a-state-constitutional-right\/\" title=\"California to Introduce Amendment to Make Abortion a State Constitutional Right\">gain total control<\/a>, they may seek to extend the tax relief from his first term while allowing the enhanced Obamacare subsidies to\u200c lapse. Conversely, if\u2062 Democrats\u2062 under Kamala\u200c Harris gain control, they may push to permanently extend the Obamacare subsidies and\u2064 raise taxes on high earners, \u2063all while maintaining some form of tax relief for the middle class without \u2062directly linking it to Trump.<\/p>\n<p>In the event of a divided government, \u200bbipartisan negotiations will be necessary, potentially resembling discussions from previous \u2062fiscal\u2062 cliffs in the early 2010s. A key factor for 2025 is the timeline for insurance companies to \u2063set their premium\u2062 rates,\u200b necessitating \u200dclarity on the status of the subsidies well ahead of their expiration. To ensure continuity of these \u2062benefits into the 2026 plan year, Congress may need \u200dto \u2063act by \u200dAugust 2025, differing from past \u200bfiscal cliff scenarios where resolutions were reached\u2062 much later.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<div>\n<p>Even though the calendar still reads 2024, many observers in Washington have begun planning for 2025. Regardless of who wins control of Congress in November&rsquo;s elections, the decisions lawmakers make in the year ahead will have a major effect on the nation&rsquo;s fiscal direction.<\/p>\n<p>While a new president and new Congress always bring changes, provisions in law guarantee a budgetary &ldquo;Big Bang&rdquo; next year. Most of the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/huge-fiscal-cliff-looms-for-the-president-and-congress-after-election-cycle\/\" title=\"Impending fiscal cliff for president and Congress post-election.\">individual income tax provisions<\/a> of the 2017 tax law expire at the end of 2025, as do expanded <a href=\"https:\/\/thefederalist.com\/2024\/07\/15\/bidens-health-insurance-plan-would-grow-the-deficit-by-335-billion-in-10-years\/\" target=\"_blank\" rel=\"noreferrer noopener\">Obamacare insurance subsidies<\/a> enacted by President Biden and Democrats during the last Congress. Negotiating &mdash; and posturing &mdash; over this large &ldquo;fiscal cliff&rdquo; will likely consume much of the new 119th Congress that begins in January.<\/p>\n<h2>Negotiating Positions<\/h2>\n<p>While we don&rsquo;t yet know the players in this negotiation, the positions of either side seem fairly clear. If granted one-party control of Congress and the executive, Donald Trump and Republicans would likely use <a href=\"http:\/\/thefederalist.com\/2017\/05\/11\/need-know-budget-reconciliation-senate\/\" target=\"_blank\" rel=\"noreferrer noopener\">budget reconciliation<\/a> to extend most or all of the tax relief enacted during Trump&rsquo;s first term as president. On the other hand, Republicans would likely allow the increased Obamacare subsidies &mdash; which have been plagued by recent <a href=\"https:\/\/paragoninstitute.org\/wp-content\/uploads\/2024\/06\/The-Great-Obamacare-Enrollment-Fraud_FOR_RELEASE_V1.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">reports of fraud<\/a>, not to mention the fact that they flow to <a href=\"https:\/\/thefederalist.com\/2021\/03\/02\/how-democrats-covid-bill-gives-welfare-to-the-wealthy\/\" target=\"_blank\" rel=\"noreferrer noopener\">wealthy individuals<\/a> &mdash; to expire by not taking action.&nbsp;<\/p>\n<p>If they have complete control of Washington next year, Kamala Harris and the Democrats would take the inverse approach. They would likely use reconciliation to enact a permanent extension of the Obamacare subsidies &mdash; or as long an extension as fiscally possible. They would also use reconciliation to raise taxes on individuals making over $400,000 and\/or corporations, while extending the Trump tax relief (though they wouldn&rsquo;t dare mention Trump&rsquo;s name) for the &ldquo;middle class&rdquo; as they define it.<\/p>\n<p>Of course, if neither party controls both houses of Congress and the White House, more detailed bipartisan negotiations would have to take place. The template for those discussions may hark back to the end of 2010 and 2012, when major components of the Bush tax package ended at the same time as several elements of economic relief during the Great Recession.<\/p>\n<h2>Different Timelines<\/h2>\n<p>But a recent Kaiser Family Foundation <a href=\"https:\/\/www.kff.org\/affordable-care-act\/issue-brief\/inflation-reduction-act-health-insurance-subsidies-what-is-their-impact-and-what-would-happen-if-they-expire\/\" target=\"_blank\" rel=\"noreferrer noopener\">brief<\/a> regarding the expiration of the insurance subsidies highlighted a noteworthy difference between the last &ldquo;fiscal cliff&rdquo; in 2012 and next year&rsquo;s deadlines:<\/p>\n<blockquote>\n<p>Insurers will have to submit their proposed premiums and justifications in early 2025 and finalize their premiums by August 2025, in advance of the 2026 open enrollment period beginning November 1, 2025. Because of this lengthy process, insurers and state and federal regulators will want to know whether enhanced subsidies will expire or be renewed well in advance of their expiration or renewal.<\/p>\n<\/blockquote>\n<p>As a practical matter, Congress would likely have to pass any extension of the increased Obamacare subsidies by next year&rsquo;s August recess to ensure the subsidies remain in effect for the 2026 plan year. That&rsquo;s what Democrats did with their misnamed Inflation Reduction Act, which extended the increased Obamacare subsidies for three additional years (from 2023 through 2025). Biden signed that bill into law on Aug. 16, 2022, and when the Exchanges opened for the 2023 plan year later that fall, they reflected the extension of the increased subsidies.<\/p>\n<p>But in 2012, Congress didn&rsquo;t pass legislation addressing that year&rsquo;s &ldquo;fiscal cliff&rdquo; until the first days of 2013. The House and Senate passed the bill on New Year&rsquo;s Day, and President Obama signed it into law on Jan. 2 &mdash; one day before the 112th Congress officially ended, at noon on Jan. 3, 2013.<\/p>\n<h2>Republican Leverage Point<\/h2>\n<p>My point isn&rsquo;t to argue that Congress should extend the Obamacare subsidies quickly &mdash; I don&rsquo;t think lawmakers should extend them at all. My point is that, should divided government remain a reality next year, Republicans have a major leverage point to use in fiscal negotiations, in the form of the diverging deadlines.&nbsp;<\/p>\n<p>Republicans will want any fiscal agreement to pass by early January 2026, in time for the Internal Revenue Service to update withholding tables for employers, so that Americans don&rsquo;t get hit with a tax increase as 2026 begins. By contrast, Democrats will want the package to pass months sooner than that, or otherwise, insurers and the Exchanges will run into logistical obstacles ahead of open enrollment for the 2026 plan year, which starts in November 2025.<\/p>\n<p>The bottom line: Democrats have an incentive to cut a deal much earlier than Republicans do. And all sides &mdash; Democrats and Republicans &mdash; should recognize that fact going in. Maybe this dynamic means that &mdash; for once &mdash; Republicans won&rsquo;t cut and run by <a href=\"https:\/\/thefederalist.com\/2021\/10\/08\/mitch-mcconnells-surrender-in-the-debt-ceiling-fight-opens-the-floodgates-for-dems-3-5-trillion-spending-bill\/\" target=\"_blank\" rel=\"noreferrer noopener\">giving up their leverage<\/a> and <a href=\"https:\/\/thefederalist.com\/2024\/01\/10\/speaker-johnson-folds-like-a-cheap-suit-allowing-democrats-to-increase-spending\/\" target=\"_blank\" rel=\"noreferrer noopener\">cutting a horrible deal<\/a>.<\/p>\n<hr>\n<p>      Chris Jacobs is founder and CEO of Juniper Research Group, a <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/game-show-judges-assess-players-on-their-unknown-knowledge\/\" title=\"Game Show Judges Assess Players on Their Unknown Knowledge\">policy consulting firm based<\/a> in Washington, and author of the book &#8220;<a href=\"https:\/\/www.amazon.com\/dp\/1645720020\">The Case Against Single Payer<\/a>.&#8221; He appeared in the 1995 &#8220;Jeopardy!&#8221; Teen Tournament and is on Twitter: <a href=\"http:\/\/twitter.com\/chrisjacobsHC\">@chrisjacobsHC<\/a>.<\/p>\n<\/p><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Although it is still 2024, many in Washington are already preparing for 2025. The outcomes of the upcoming November elections will determine who controls Congress, but the choices made by lawmakers in the coming year will significantly influence the country&#8217;s financial trajectory. A new president and Congress typically bring about changes, but legal provisions ensure a substantial budgetary shift next year. Most individual income tax measures from the 2017 tax reform are set to expire at the end of 2025, along with expanded Obamacare insurance subsidies introduced by President Biden and Democrats during their last term. The negotiations surrounding this significant &#8220;fiscal cliff&#8221; will likely dominate much of the new Congress that convenes in January.<\/p>\n<p>**Negotiating Positions**<\/p>\n<p>While we don&#8217;t yet know who will be involved in these negotiations, each side&#8217;s stance appears relatively clear. If Donald Trump and Republicans gain full control of Congress and the presidency, they would probably use budget reconciliation to extend most or all of the tax cuts from Trump&#8217;s first term. Conversely, Republicans might allow increased Obamacare subsidies\u2014recently criticized for fraud issues and benefiting wealthy individuals\u2014to lapse without intervention.<\/p>\n<p>If Kamala Harris and Democrats have complete control next year, they would likely take an opposite approach by using reconciliation to make Obamacare subsidies permanent or extend them as long as financially feasible. They would also aim to raise taxes on individuals earning over $400,000 or corporations while extending Trump-era tax relief for what they define as &#8220;middle class,&#8221; though they wouldn&#8217;t mention Trump&#8217;s name directly.<\/p>\n<p>If neither party holds both chambers of Congress along with the presidency, more detailed bipartisan discussions would be necessary. These talks could resemble those from late 2010 and 2012 when key elements of Bush&#8217;s tax package expired alongside various economic relief measures during the Great Recession.<\/p>\n<p>**Different Timelines**<\/p>\n<p>A recent brief from Kaiser Family Foundation regarding insurance subsidy expirations pointed out a significant difference between past fiscal cliffs (like that in 2012) and next year&#8217;s deadlines: Insurers must submit proposed premiums early in 2025 and finalize them by August that same year before open enrollment begins on November 1 for plans starting in 2026. This lengthy process means insurers need clarity on whether enhanced subsidies will continue well before their expiration date.<\/p>\n<p>Practically speaking, any extension of increased Obamacare subsidies would need congressional approval before August recess next year to ensure coverage remains effective for plan year 2026\u2014similar to how Democrats extended these subsidies through their Inflation Reduction Act signed into law on August 16, 2022.<\/p>\n<p>In contrast, legislation addressing that year&#8217;s fiscal cliff wasn&#8217;t passed until early January 2013; it was approved just hours into New Year&#8217;s Day before being signed into law one day prior to Congress&#8217;s official end.<\/p>\n<p>**Republican Leverage Point**<\/p>\n<p>My intention isn&#8217;t necessarily advocating for a quick extension of Obamacare subsidies\u2014I believe lawmakers should not extend them at all\u2014but rather highlighting that if divided government persists next year, Republicans hold significant leverage due to differing deadlines.<\/p>\n<p>Republicans will want any fiscal agreement finalized by early January 2026 so that IRS can update withholding tables accordingly; this prevents Americans from facing a tax increase at the start of that year. Meanwhile, Democrats prefer an earlier resolution so insurers can avoid logistical challenges ahead of open enrollment starting November 2025.<\/p>\n<p>Ultimately: Democrats have more incentive than Republicans do to reach an agreement sooner rather than later\u2014a fact both parties should acknowledge going forward. Perhaps this dynamic means Republicans won&#8217;t squander their leverage this time around by settling for unfavorable deals.<\/p>\n<p>Chris Jacobs is founder and CEO of Juniper Research Group\u2014a policy consulting firm based in Washington\u2014and author of &#8220;The Case Against Single Payer.&#8221; He participated in Jeopardy!&#8217;s Teen Tournament back in &#8217;95 and can be found on Twitter @chrisjacobsHC<\/p>\n","protected":false},"author":521,"featured_media":2321802,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/08\/US-Capitol-Building-photo.jpg","fifu_image_alt":"","footnotes":""},"categories":[546],"tags":[16840,37655,6203,3673],"class_list":["post-2321801","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-federalist","tag-16840","tag-fiscal-cliff","tag-gop","tag-lawmakers"],"fifu_image_url":"https:\/\/thefederalist.com\/wp-content\/uploads\/2024\/08\/US-Capitol-Building-photo.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2321801","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/521"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2321801"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2321801\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2321802"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2321801"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2321801"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2321801"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}