The House and Senate cleared the final version of the Tax Cuts and Jobs Act, which was signed into law on December 22. Congress also approved a short-term continuing resolution to keep the government funded through January 19, and cleared a disaster assistance package for victims of hurricanes and wildfires.
Congress Clears Landmark Tax Legislation… Most Higher Education Provisions Removed from Final Bill
Just prior to adjourning for the December holidays, Congress cleared the Tax Cuts and Jobs Act, or H.R. 1, the most significant reform of the tax code since 1986. The bill went through several significant changes prior to final passage, but ultimately the prime focus – corporate tax relief – remained unchanged. Criticism of the legislation, chiefly that it benefits the wealthiest taxpayers, was not ameliorated by the final product.
The final bill, however, could have been far worse for the higher education and science communities. After hearing significant concerns from college and university presidents, administrators, professors and students, congressional leaders agreed to drop several provisions that were included in the House bill, including a repeal of the income exclusion for graduate tuition waivers, which would have subjected thousands of graduate students to increased taxes. The final bill preserved current law provisions that allow employers to offer tax-free paid assistantships to graduate students. The final bill also preserved deductions for student loan interest payments.
However, the higher education is concerned about a provision that did survive in the final bill: a new tax on private college endowments. The new law includes a 1.4 percent excise tax on investment income at private colleges with an enrollment of at least 500 students and with assets valued at $500,000 per full-time student.
The long-term debt and spending implications of the Tax Cuts and Jobs Act will be realized over time. According to the Congressional Budget Office, the new law will add at least $1 trillion to the national debt. This will only increase the budgetary pressure to cut federal investments in higher education, including student loan programs, and federal research programs at the National Science Foundation (NSF) and the National Institutes of Health.
Government Shutdown Avoided…For Now….
Three months into the fiscal year, Congress still has not approved a fiscal year 2018 budget. Congressional negotiators remain far apart on agreeing to broad spending levels for defense and non-defense programs. Other issues, such as funding for the border wall, DACA, and health insurance market stabilization, continue to complicate a final resolution of a budget and spending package.
Congress did manage to approve another short-term continuing resolution to keep the government funded at existing fiscal year 2017 levels, through January 19, 2018. With the new deadline fast approaching, Congress will most likely need to approve another continuing resolution to avoid a government shutdown (current discussions revolve around another month-long resolution). At this stage, it is not a given that Congress will pass a “clean” continuing resolution. Members of Congress from both parties may demand certain conditions be attached to secure their vote, increasing the risk that an actual government shutdown may happen on January 19.
The Fate of Social Science Funding in 2018
The year 2017 was a relatively quiet year for social and behavioral science funding. While the Trump Administration proposed significant cuts to NSF — cuts largely rejected by Congress — these cuts would have been spread relatively evenly across all NSF research directorates, and would not have disproportionately hurt the Directorate for Social, Behavioral and Economic (SBE) Sciences. In addition, there were no legislative attempts to cut SBE funding through authorization measures such as the America COMPETES reauthorization bill approved by the House in the 114th Congress (2015-2016).
Despite this brief respite, there are indicators that 2018 will be a more contentious year, leading up to the most significant mid-term elections in modern history. In two different op-ed pieces (“Science That Leads”, Roll Call, November 30, and “To fill STEM jobs, federal programs need to focus on results”, The Hill, December 20:), House Science Committee Chairman Lamar Smith states that an emphasis by NSF on funding social science research is hurting us competitively in the global economy. In both pieces, he focuses on graduate research fellowships, and his claims are refuted in a piece drawn from FactCheck.org.
This will be Representative Smith’s last year in Congress and last year as chairman of the House Science Committee, and he is likely to attempt to leave a “legacy” before departing. He may attempt to move through committee another legislative vehicle, such as an America COMPETES reauthorization bill, to re-orient funding levels at each NSF directorate. He may also seek to focus more NSF funding for graduate research fellowships in computer science, at the expense of the social science fellowships.
In the News…
“Final GOP Deal Would Tax Large Endowments” | Inside Higher Education
“Trump’s Disdain for Science” | New York Times, Op-Ed by Neal F. Lane and Michael Riordan
Late Night Quotable
There’s been a lot of criticism. I read that only 24 percent of Americans think the GOP tax plan is “good.” To put that in perspective, The Spice Girls movie got a 29 percent score on Rotten Tomatoes.
Jimmy Fallon, December 20
The FCC today voted 3-2 along party lines to repeal Obama-era net neutrality rules. And if you’re not sure what that means, better Google it while you can.
Seth Myers, December 14
Ireland will be collecting $15 billion from Apple in a settlement over back taxes. Ireland will receive the money on Friday, and Guinness will have it all by Monday.
Conan O’Brien, January 3