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February 2018

Successful Tax Cut Bill Consequences Now Pointing Toward Cuts in Social Security, Medicare and Medicaid? Debates Will Definitely Ensue

Washington Watch

 

With the tax bill signed into law, House Speaker Paul Ryan, R-Wis., has set his sights on reforming Medicare, Medicaid, Social Security and welfare in 2018. But he will have to overcome several big barriers to be successful, including reversing President Donald Trump's repeated campaign pledge not to touch those specific federal entitlement programs for the elderly.

 

Senate Majority Leader Mitch McConnell, R-Ky., and Ryan are also at odds over whether to tackle entitlement reform in a mid-term election year, which traditionally favors the party out of power – in this case, the Democrats. Ryan has made no secret that he expects the national debt to skyrocket, thanks in part, to the tax legislation, which lawmakers approved without a way for it to pay for itself. So Ryan wants to balance the books over the next few years by tackling Medicare and other entitlement programs

 

Ryan's ideas were greeted with some blowback from his own party. He has since appeared to narrow his expectations after several GOP leaders on both sides of the Capitol expressed reservations about the political optics of cutting the safety net for the elderly or poor when Republican majorities in the House and Senate are on the line in the 2018 midterm elections.

 

The tax legislation passed without a single Democratic vote in the House and the Senate. But Republicans will need Democratic support in order to get anything controversial done this year. But the reality of the narrow Republican-controlled U.S. Senate – now one vote tighter with the election of the Democrat, Doug Jones, over Roy Moore in Alabama – is that for almost anything else to pass, Republicans will need at least eight or nine Democratic votes. It takes 60 votes to avoid a filibuster.

 

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How Some Key Elements of the Tax Reform Bill May Affect Seniors

 

The long awaited, hotly debated tax reform bill finally passed and was signed into law on December 22. During the months of debate between the House and Senate versions of the bill, there was a lot of confusion about what was proposed, what was eliminated, and what made the final cut. The IRS even published the changes that were anticipated and relied upon, but are now changed.

 

Known as the Tax Cuts and Jobs Act (TCJA), it affects most everyone in various ways. Here are several parts of the final bill that will affect everyone who files tax returns, and some that will affect seniors more than most.

 

Personal and dependency exemptions and standard deductions.

 

Beginning in 2018 there is no such thing as a personal and dependency exemption, as these are eliminated. (In 2017 these exemptions were $4,050.) Standard deductions nearly doubled. They are:

  • $12,000 for singles (up from $6,350 in 2017)

 

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