While "tax policy will be a significant" general election issue in 2024, "significant tax legislation" will not pass until after the 2024 election, according to Jeff Bush of The Washington Update.
The House Ways and Means Committee was busy Tuesday marking up Chairman Jason Smith's American Families and Jobs Act, which Bush told ThinkAdvisor is "a resurrection of the tax bill that both parties worked on at the end of last year, although with additional asks."
The package would temporarily increase the standard deduction, greatly increase the amount business owners can pay contractors without reporting to the IRS and repeal a controversial tax reporting rule change for Venmo and PayPal transactions, among other provisions.
Responding to emailed questions from ThinkAdvisor, the political strategist discussed an array of political issues including the tax plan and how advisors will know when Congress is "serious" about shoring up Social Security. The retirement program could end up looking "significantly different" for younger clients, Bush suggests.
While the House may be able to get the tax plan, which includes three bills, to the floor and pass it, Bush said he doesn't see the plan passing in the Democrat-controlled Senate "without significant changes."
Specifically, "I believe the Democrats will demand a restoration of the pandemic-era enhanced Child Tax Credits and perhaps an increase or elimination of the $10K SALT cap," Bush said, referring to the $10,000 limit on state and local taxes that can be deducted on federal tax returns. "A similar bill failed to move in December, and I predict this effort will meet the same fate."
We caught up with Bush to get his thoughts on the tax plan, what else is brewing in Congress and the biggest issues facing advisors. Advisors, he warns, "need to help clients plan for inevitable changes in their retirement landscape," including the real possibility that Social Security will change for younger clients. This emailed Q&A has been lightly edited for style and formatting.
THINKADVISOR: Now that the debt ceiling agreement is law, what's next?
JEFF BUSH: The next thing I am watching is the outstanding Supreme Court decisions. They have 27 yet-to-be-announced decisions concerning student loan forgiveness, affirmative action, independent state legislature doctrine and more.
The court's decision last week directly impacted the 2024 House election by creating an additional likely Democratic seat in Alabama. Beyond Alabama, more states may be forced to draw new House maps and, on balance, give Democrats better odds to take back the majority in 2024 vs. 2022.
What about the debt ceiling deal itself?
Several GOP caucus members are unhappy with the final debt ceiling deal. As evidence of this, the House's current revolt by House Freedom Caucus members who believe Speaker [Kevin] McCarthy broke his spending cut promises to them. Promises that ultimately handed McCarthy the speaker's gavel.
Anyone that has seen me speak knows I love quoting historical figures, and what struck me immediately after the debt ceiling deal's passage was a quote from Winston Churchill.
He said, "Now, this is not the end. It's not even the beginning of the end. But it is, perhaps, the end of the beginning."
The quote perfectly fits where we are in the fiscal debate in June 2023.
What's next for lawmakers?
Next up, appropriations.
The appropriation bills are a more straightforward opportunity for Republicans to push for spending cuts. The debt ceiling imposes spending caps for two years and suggests continued caps for subsequent years. But caps are ceilings, not floors, and I expect the House Republicans will champion actual spending cuts during the appropriations process.
The government will shut down if Congress does not complete the appropriations process by fiscal year-end, Sept. 30, or pass a continuing resolution (CR).
Source: CBO: The Budget and Economic Outlook, Feb 15, 2023 
CBO: The Budget and Economic Outlook, Feb 15, 2023 
