Maybe this deserves its own thread but I’m confused about how the new US sovereign wealth fund fits into the tax landscape?
Will it be funded as part of the budget Congress passes each year? How do we fund a sovereign wealth fund ahead of paying down our debt which keeps growing annually? Aren’t these typically funded by budget surpluses? But then isn’t it like putting money in a savings account while carrying a credit card balance?
Or is it just another way to add an indirect consumption tax funded by tariffs passed on to American consumers?
Hard to know but you can see how Norway did theirs -
Basically they sold oil wealth and bought diversified holdings outside their country. Under Trump, maybe we’ll diversify into TikTok and Bitcoin lol. Who knows, I think it’s pretty speculative at this point.
So basically as a small country, Norway invested the surplus from suddenly being able to sell tons of oil into diversified holdings. It’d be nice if we had a huge sudden windfall like that but we have the opposite, aka out of control national debt.
That doesn’t do anything to alleviate my current understanding that what this swamp slush fund gets funded at my expense while DC keeps growing federal debt like a kid on a shopping spree with their parents “borrowed” credit card.
By adding a sneaky indirect extra tax to fund a social security bridge? And if funded by tariffs, why not just have a federal VAT? Because it’d be more obvious that it’s an additional consumption tax? And that’d excuse Congress from actually fixing this bloated entitlement system?
I also hope the sovereign fund is not a slush fund with vaguely defined purpose. It’s not even approved by Congress yet and the vultures are already calling dibs on it for their pet projects. So you can bet that it will be raided for whatever one administration calls the next “national emergency” and there’ll be nothing left for funding what it’s actually supposed to.
TCJA required the tax cuts to be temporary to pass via reconciliation (to not increase deficits over a 10-year window) and now it seems the GOP wants to ignore the current law passed under the previous Trump administration to make it easier to pass a deficit-inducing new tax bill via reconciliation…
I hope the CBO does not give them a pass on the clear cut bait and switch trying to ignore $5T extra debt they’d create by the new tax law. And here I thought Dems were creative with their varied attempts to wipe out student loan debt via shady tactics. This creative tomfoolery would take it to another level though.
I fail to understand how a temporary tax cut for 8 years doesnt increase deficits, while that same tax cut extended to 9 or 10 years does increase deficits?
TCJA was passed via reconciliation process in 2017. That reconciliation process always requires that a new law does not add to the budget deficit over a period of 10 years using the CBO projections.
So the tax cuts for 2018-2024 fiscal years which were deficit inducing (by bringing in too low revenues) were designed to be balanced over the 10-yr period by an increase in tax revenues (which would be deficit reducing) from 2025-2027 fiscal years.
So now the GOP wants to use current tax levels as baseline even though they are deficit inducing according to the CBO. Just so the new tax law is revenue-neutral over the next 10-yrs (in order to use reconciliation again) vs this deficit-inducing baseline. Basically not only reneging on its own 2017 reconciliation process but also guaranteeing deficits for the next 10 years.
In simple terms, it’s a kid promising to eat their veggies after having dessert first, and when it comes to it claims to be too full to eat any veggies. And then deciding that future meals will always start with dessert and not even feature veggies at all.
Something like that except IIRC the CBO also factored in extra GDP growth caused by the tax cuts as part of the budget neutrality of the TCJA. Just look it up to get more details, but the point is the expiration of the tax cuts were part of the neutrality of the TCJA. So not letting the tax cuts expire seems pretty clear bait and switch.
That seems to be supported by the budget deficits increasing throughout the Trump 1st presidency. Budget deficit was $0.59T in 2016 (last Obama fiscal year) and up to $0.98T in 2019 (last Trump fiscal year not impacted by COVID). That’s a 66% increase in budget deficit in 3 years. So calling the current deficit-inducing tax policy a new baseline seems like a guarantee to have budget deficits over the next 10 years.