How the Federal spending bill affects 2016

Thanks to the new spending bill, 2016 will look a little different than previously thought.

The official 2016 budget.

WASHINGTON, December 19, 2015 – Now that the House and Senate passed, and the President signed, a  series of 12 bills appropriating the federal government to spend an additional $1.1 trillion above the mandated $2.8 trillion already authorized, 2016 will look a little different than previously thought. A number of the provisions have a significant impact in many key areas.

Maybe the most significant affect will be on the Affordable Care Act (ACA). Recently, President Obama praised the ACA noting that the rate of uninsured Americans has dropped to below 11%. This is down from 14% which was the rate before the law took effect. (In other words, the law benefited 3% of the population.)

The problem going into 2016, which was made worse by the new spending bill, is that there is no funding for the ACA’s risk corridor program. This program was supposed to use tax payers’ funds to pay health insurer’s co-ops so that they did not incur a loss and indeed made a normal profit. Already 12 of the 23 co-ops have folded because of underfunding by the government in 2015. The remaining 11 are also likely to leave the market in 2016.

Add to that, the Cadillac tax was repealed. That placed a 40% tax on premium health care plans offered by employers. Some proponents of the tax argued that this would ultimately reduce health care costs. The opponents argued that this tax was excessive and burdensome. Also putting a tax on anything always raises the price, not lowers it. The result is another funding shortfall for the ACA. Along with the elimination of co-ops, the ACA may collapse in 2016.

Republicans argue that this was a victory for them on their road to repeal and replace the ACA. They also claim victory in others areas that will affect 2016. The long time ban on the export of oil was lifted which will likely raise oil production in the US. That could help stimulate growth while having little or no effect on consumers’ price at the pump.

Republicans also say they some expiring tax deductions were extended and they were able to pass some stricter measures on immigration which should help grow the economy and somewhat reduce the terrorism threat.

At the same time, Democrats said that they were victorious in having a number of bills passed that will strengthen their programs in 2016. A primary concern for them is the environment. They were able to get the spending bill passed without any further restrictions on the EPA. Opponents cited a report from the Government Accountability Office which concluded that the EPA essentially broke the law when implementing its new water rule. Opponents could only stop this law by not funding it. The funding was included.

Democrats also claimed victory because the bill does not contain any measure restricting the Syrian refugee program or ending the funding for Obama’s executive actions on immigration. In 2016 Obama wants to admit 10,000 Syrian refugees. Unless prohibited by the court, Obama’s plan will be implemented.

Democrats also note that no restrictions have been placed on the funding of Planned Parenthood, so the agency will be able to continue all of its operations in 2016. They also say they were victorious in extending tax credits for wind and solar production for another 5 years. That means the wind and solar industries will continue to grow in 2016 knowing there is the certainty of at least five more years of tax credits.

One of the disappointments the Democrats noted was that the issue of the financial condition of Puerto Rico was not included. PR has already defaulted on a debt payment and will default on a large payment in January. PR cannot declare bankruptcy without Congressional approval so they need assistance. Speaker Ryan assured Harry Reid that the House will act on this before the end of March 2016.

The spending bill will shape much of the debate during 2016 when the Presidential campaign will provide a near daily reminder of how much Congress is spending in 2016 (almost $4 trillion), how much Congress is taxing Americans in 2016 (about $3.5 trillion) and how much the federal government is regulating. There are wide differences of opinion and the recently passed spending bills kick the confrontation from this year to 2016.

Hold on for a wild ride.

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