Last night while you were sleeping, the U.S. government shut down briefly, reopened again, then passed a new budget deal.
This was the second government shutdown in just two weeks, occurring despite bipartisan support for a controversial budget deal to keep the government running through 2019.
Although the budget bill eventually passed the U.S. Senate and House of Representatives, a filibuster by Republican Sen. Rand Paul lamenting a rise in the deficit prevented the bill from passing before midnight. This lead to the shortest government shutdown ever — about five and a half hours long.
Now that the budget deal has been signed by President Donald Trump, here’s what you need to know about it, including how it affects students and taxpayers.
Just how massive is the budget compromise bill?
The budget compromise legislation provides a budget framework for fiscal years 2018 and 2019. The two-year budget agreement exceeds 2011 spending caps on defense and nondefense spending by around $300 billion.
The president tweeted his excitement about signing the new budget deal.
Just signed Bill. Our Military will now be stronger than ever before. We love and need our Military and gave them everything — and more. First time this has happened in a long time. Also means JOBS, JOBS, JOBS!
— Donald J. Trump (@realDonaldTrump) February 9, 2018
The new budget deal also provides almost $90 billion in disaster relief for Puerto Rico, the U.S. Virgin Islands, Florida, and Texas.
Congress now has permission to spend $500 billion more throughout the next two years, adding an estimated $320 billion to the deficit. The debt ceiling will also be suspended until March 2019.
Lawmakers, working within the framework set out within the budget compromise, will have until March 23 to draft a $1.3 trillion omnibus spending bill. Once this appropriations bill is set into law, it will keep the government funded until September 2019.
How students and taxpayers are affected by the new budget deal
For taxpayers, the new budget deal includes:
- A retroactive extension of tax cuts providing mortgage debt relief
- Deductions for private mortgage insurance
- Deductions and credits for green energy projects
The new budget deal also retroactively reinstated the Tuition and Fees deduction, which had expired at the end of the 2016 tax year. The deduction had previously permitted qualifying taxpayers to deduct up to $4,000 in eligible tuition expenses paid throughout the year by the taxpayer, or by the taxpayer’s spouse or dependent.
With the Tuition and Fees deduction, taxable income can be reduced by as much as $4,000 if modified adjusted gross income does not exceed more than $80,000 for single filers or $160,000 for joint filers.
Thanks to the two-year budget bill, students no longer need to worry about whether a government shutdown will affect federal student loan approvals, financial aid disbursements, or higher education grants until the end of the 2019 fiscal year.
- $4 billion for college affordability programs designed to help firefighters, police officers, and teachers afford the cost of college.
- Preservation of student loan repayment programs for health providers in underserved populations.
- Preservation of funding for training hospitals where new medical students complete their residencies.
Big increases in spending for domestic programs and the military
Domestic programs will receive an additional $63 billion this fiscal year and an additional $68 billion next year. This includes billions of additional dollars for:
- Rebuilding veterans’ hospitals
- Fighting opioid addiction
- Abstinence education
- Disaster relief
- Two years of funding for community health centers
There’s also an additional four-year extension of the Children’s Health Insurance Program (CHIP). The program is now funded for 10 years.
The new budget also prevents several cuts to Medicare and Medicaid that would have occurred had the spending caps not been lifted.
Where does Congress go from here?
Although the new budget compromise contained something for everyone, many Democrats and Republicans in Congress expressed their displeasure with it.
Many Republicans in Congress objected to the government spending increases, while the House Freedom Caucus tweeted:
Official position: HFC opposes the caps deal. We support funding our troops, but growing the size of government by 13 percent is not what the voters sent us here to do.
— House Freedom Caucus (@freedomcaucus) February 8, 2018
For many Democrats in Congress, the biggest problem with the two-year budget bill is the loss of leverage necessary to protect undocumented immigrants at risk of deportation.
President Trump stated that March 5 would mark the end of an Obama-era program titled Deferred Action for Childhood (DACA) arrivals. DACA authorizes temporary legal status and provides work permits for undocumented immigrants, often called Dreamers, who meet qualifying requirements including being brought to the U.S. as children.
“Anyone who votes for the Senate budget deal is colluding with this President and this Administration to deport Dreamers,” said Rep. Luis V. Gutiérrez, a Democrat from Illinois, in a statement. “It is as simple as that.”
Now members of Congress will wait and see if Republican Senate Majority Leader Mitch McConnell and Republican House Majority Leader Paul Ryan deliver on their promises to bring up legislation related to DACA to a vote before March 5.
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