Trump Scores a Win From NATO, but Fireworks Ahead

Trump Scores a Win From NATO, but Fireworks Ahead

Ahead of NATO’s 70th anniversary meeting in London this week, Secretary-General Jens Stoltenberg announced last Thursday that the U.S. will contribute less to the alliance’s relatively small central budget.

Member nations collectively provide NATO’s $2.5 billion budget, which covers the cost of operating the headquarters in Brussels and a handful of joint military operations. Contributions have been based on the size of each country’s economy, with the U.S. providing the largest share at 22%. Starting in 2021, the U.S. contribution will be reduced to 16%, while Germany’s share will rise to the same level, up from 14.8% currently. Other members of the alliance will make up the rest.

Steven Erlanger of the New York Times said the move appears to be an effort to placate President Trump, who has complained that NATO nations are not paying their fair share for defense. NATO leaders are reportedly bracing for what could be tense discussions about military spending at the meetings this week. "The betting is that there are going to be some fireworks," James Townsend, a former deputy assistant secretary of defense for Europe and NATO, told CNN.

Overall defense spending is a separate issue from the central budget, though, and is driven by each member’s individual defense budget. Total defense spending among member nations will top more than $1 trillion in 2019, according to NATO estimates. NATO nations have agreed to spend 2% of their national budgets on defense by 2024, with only eight of the 29 members currently doing so.

On Congress’s To-Do List: Prevent a Shutdown in 18 Days

Congressional appropriators back from their Thanksgiving recess have just three weeks to hammer out details on dozens of policy differences over federal funding for fiscal year 2020, which started on October 1. At stake: A possible partial government shutdown when current stopgap funding expires on December 20.

House Democrats and Senate Republicans overcame one hurdle before the holiday, reaching an agreement on how to allocate $1.37 trillion in discretionary spending across 12 annual appropriations bills.

Roll Call’s Jennifer Shutt reports on the hurdles that remain:

“Subcommittee chairmen and ranking members now need to work out how much of their allocation goes to the various agencies funded in the bills and resolve some of the most polarizing issues facing the country, including the border wall, family planning grants and gun violence research.

“For now, appropriators are hopeful they can get much of their work done before the stopgap spending bill expires Dec. 20 at midnight. But three weeks is not a lot of time to resolve all the differences, leaving open the possibility that some bills get resolved while others face yet another continuing resolution. Another partial government shutdown also cannot be ruled out.”

Homeland Security funding remains a key point of contention, with the final top-line allocation for the department lower than Senate Republicans had provided in their bill, which provided nearly $71 billion, including $5 billion for construction of border barriers. The bill covering military construction and the VA is also likely to be the subject of heated fights as Democrats look to restrict the Trump administration’s ability to again divert funding toward barrier construction.

Among the other provisions that could become flashpoints in the negotiations are:

• $50 million provided by the House version of the Labor-HHS-Education bill for gun violence research by the Centers for Disease Control and Prevention;
   
• A Democratic effort to roll back a Trump administration rule preventing health care organizations that provide or refer patients for abortions from receiving Title X family planning grants.

To avoid a shutdown after December 20, lawmakers will need to pass all 12 of the spending bills — or they could pass some of the 12 full-year bills and another continuing resolution covering any parts of the government that have not been funded.

Only One Demographic Group Opposes Warren’s Wealth Tax

The idea of a wealth tax like the one proposed by Sen. Elizabeth Warren is popular with a broad swath of voters, Ben Casselman and Jim Tankersley of The New York Times report. A new nationwide poll conducted for the Times by SurveyMonkey finds that 63% of Americans support Warren’s 2% tax on wealth above $50 million, though that number has slipped from 66% over the summer. Backing among independents has fallen from 66% to 55%. It has slipped a bit among Democrats as well, from 81% to 77%. But Republican support for the idea has edged up slightly, and majorities of Republican women and GOP men without college degrees favor it. “The proposal receives majority support among every major racial, educational and income group,” Casselman and Tankersley write.

The only demographic group that strongly opposes the tax is Republican men with college degrees. “Not surprisingly,” the Times reporters say, “that is also the profile of many who’d be hit by Ms. Warren’s so-called wealth tax.”

The SurveyMonkey poll also finds that 54% of Americans support Medicare for All while 42% oppose it, with opinions on the health care plan sharply divided along partisan lines. And 48% of voters disapprove of the 2017 Republican tax law, compared to 45% who support it.

63% of Americans Say the Health Care System Has Huge Problems — and That’s an Improvement

Here’s a nugget of good news: Nearly two-thirds of Americans surveyed by Gallup say that the U.S. health care system is in a state of crisis or has major problems. Yes, that’s good news because Gallup says it’s “one of the least negative assessments” since it started tracking the issue in 1994 and the lowest since 2002. Over the last 25 years, the average share of Americans who rate the health care system as being in crisis or having major problems has been 69%.

Of course, the results are clouded by partisan differences in perception of the health care system. Republicans’ negative views have dropped significantly since hitting a peak of 80% in 2016, the last year of President Obama’s second term.

The bottom line: “Americans' perceptions of the state of the U.S. healthcare system have been steady, with between 60% and 70% assessing it as having at least major problems,” Gallup’s Justin McCarthy says. “This has been consistent across four presidencies with differing approaches to healthcare policy.”

Quote of the Day: Going Nowhere Fast

“I’ve said to people here, if you’ve been here four years or less you’ve never seen the Senate. And you would have loved it. It was an interesting place. We had bills, and amendments ... we did big things.”

– Senate Minority Whip Dick Durbin (D-IL), reflecting on the inability of his fellow lawmakers to pass important legislation, including new laws focused on surprise hospital bills and drug prices. Here’s how Politico’s Marianne Levine and Sarah Karlin-Smith summed up the current status of the drug bill, in the article featuring Durbin’s quote: “President Donald Trump has vowed to lower the cost of prescription drugs. A Senate committee has approved a bipartisan bill to do just that. And the plan is going nowhere fast.”

Welcome back! We hope you had a great Thanksgiving weekend and were less bombarded by Cyber Monday emails today than we were. Send your tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can sign up here for their own copy of this newsletter.

News

• Congressional Tax Writers Look for Opening to Move Legislation – Bloomberg Tax
• How a Fight Over Health Care Entangled Elizabeth Warren — and Reshaped the Democratic Presidential Race – Washington Post
• Silicon Valley Giants Accused of Avoiding Over $100 Billion in Taxes Over the Last Decade – CNBC
• Navy Infrastructure Plan Will Cost ‘Billions’ More Than Expected, Report Says – Washington Post
• FEMA’s Hurricane Aid to Puerto Rico and the Virgin Islands Has Stalled – New York Times
• Off the Radar: U.S. CEOs' Jet Perks Add Millions to Corporate Tax Bills – Reuters
• Most Americans Haven't Heard About the Green New Deal Despite All the Talk in Washington – Washington Post
• The Way Out for a World Economy Hooked on Debt? More Debt – Bloomberg News
• Walmart Dodged US Tax on $2 Billion by Routing Cash through Multiple Countries, Whistleblower Says – Quartz
• Pfizer, Novartis Lead $2 Billion Spending Spree on Gene Therapy Production – Reuters
• A Change in Medicare Has Therapists Alarmed – New York Times
• In Campaign to Stop Teen Vaping, States Turn to Tried-and-True Remedy: Taxes – Kaiser Health News
• This Doctors Group Is Owned by a Private Equity Firm and Repeatedly Sued the Poor Until We Called Them – ProPublica
• State Lawmakers Acknowledge Lobbyists Helped Craft Their Op-Eds Attacking Medicare-for-All – Washington Post
• Tennessee Becomes New Front in Fight to Overhaul Medicaid – The Hill
• Meet the Leftish Economist With a New Story About Capitalism – New York Times

Views and Analysis

• Yes, Americans Are Feeling the Squeeze. It’s Coming From Health Care – Robert J. Samuelson, Washington Post
• Economics Used to Be All About What We Can’t Do. That’s Finally Changing. – Jared Bernstein, Washington Post
• What’s the Matter with Medicare for More? – Merrill Goozner, Modern Healthcare
• Trillion-Dollar Deficits as Far as the Eye Can See, and Hardly a Voice of Caution to Be Heard – Albert Hunt, The Hill
• ‘Tax Cuts 2.0’ Could Include a Rate Reduction for the Middle Class. Here’s Who Would Benefit Most – Sarah O’Brien, CNBC
• The Unending Indignities of Alzheimer’s – Jeneen Interlandi, New York Times
• Medicaid Covers Sick or Dying Children. But It Takes ‘Going to Battle’ to Get It – Maria Kefalas, STAT
• Policymakers Are Taking the Wrong Approach to Health Care Reform – Liz Helms, STAT
• Warren Has the Remedy for Health Costs – Simon Johnson, Wall Street Journal (paywall)
• If You Can’t Have Wealth Taxes, You Don’t Have a Country – Eric Levitz, New York
• Democrats' Wealth Tax Numbers Don't Add Up – Edward J. McCaffery, CNN
• Would Canceling Student Debt Stimulate the U.S. Economy the Way Candidates Say It Would? – Ray Levy-Uyeda, Fortune
• Stop Treating American Expats Like Tax Cheats – Andreas Kluth, Bloomberg