The legislation that has created a $4 trillion time bomb for 2024
Cami Mondeaux
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The victor of the 2024 election is set to face a number of new legislative deadlines immediately upon entering office that could have drastic effects on the country’s economy.
More than a dozen candidates are eyeing the Oval Office in 2024, positioning themselves as the best choice to address the nation’s cultural and economic challenges. However, upon taking office in 2024, the winner of the presidential election must deal with the impending expirations of both the 2017 tax law as well as subsidies included in Obamacare.
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On top of that, the debt limit bill is also set to expire just days before the president is sworn in, once again making it a top issue in a likely divided Congress.
The Tax Cuts and Jobs Act of 2017 was passed under the Trump administration along party lines. The bill amended the Internal Revenue Code to provide reduced tax rates as well as modified deductions for people and businesses, resulting in roughly $3.6 trillion in tax cuts.
Many of those tax cut provisions are set to expire in 2025, with congressional Republicans likely wanting to continue it in some capacity because it was a signature policy accomplishment for the party when it was passed.
Meanwhile, Democrats are expected to push for a renewal of enhanced Obamacare subsidies that were passed in 2021, which also serves as a significant accomplishment for the party. That extension was passed as part of the Inflation Reduction Act, which is set to expire in 2025.
In previous years, the conflicting expiration dates could act as a negotiation tool for both parties to secure key legislative wins while offering compromises to the other side. However, that strategy may be easier said than done in the current political climate, as demonstrated by the debt limit negotiations just last month.
The nation’s borrowing limit is suspended until Jan. 1, 2025, under the Fiscal Responsibility Act passed last month by Congress. The country’s debt level is expected to be even higher by then, forcing Republicans to choose whether to raise taxes to help pay for those costs or to extend the cuts already passed in their 2017 bill.
Meanwhile, Democrats will be faced with a similar challenge as they look to extend their Obamacare subsidies because raising taxes is expected to be an unpopular proposal in several of the districts Democrats represent.
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One way lawmakers could avoid such legislative headaches is by passing temporary extensions in the interim as both parties continue negotiations for more permanent changes. But doing so could amount to just kicking the can farther down the road, putting the nation’s economy into a more precarious position, according to some financial experts.
“There are other ways to have a deal that would be fairer to both sides that don’t involve sticking the bill to our grandkids,” Marc Goldwein, senior vice president and senior policy director of the Committee for a Responsible Federal Budget, told Axios.