Ten Sneaky Sleeper Provisions
The headlines in the budget reconciliation bill that passed the House by one vote early Thursday morning are well known: massive tax cuts for the rich financed by crippling program cuts in Medicaid and food stamps, raising the federal debt by $3.3 trillion over a decade, and in turn spooking bond markets. But a lot of other mischief is buried in the fine print. Here are ten of the worst:
Crippling Courts. The bill, hiding behind the premise that it is an appropriations measure, prohibits any funds from being used to carry out court orders holding executive branch officials in contempt. This is designed to enable Trump and his officials to continue defying court orders. It is almost certainly unconstitutional—if courts have the nerve to say so.
Bonus for the Tax Prep Industry. The Biden administration sponsored a Direct File measure to allow taxpayers to save money by using a free IRS tool to file their tax return rather than paying commercial tax preparers. The program is now available to taxpayers in 25 states. The reconciliation bill repeals the program.
More Savaging of Migrants. The bill adds $45 billion to build immigration jails—more than 13 times ICE’s current detention budget. The bill would allow indefinite detention of immigrant children. It also adds several fees intended to harass. The measure charges families $3,500 to reunite with a child who arrived alone at the border, and a person seeking asylum will have to pay an “application fee” of at least $1,000.
Terminating the Tax Status of Nonprofits. The reconciliation text gives the administration the power to define nonprofits as “terrorist-supporting organizations” and expedite the ending of their tax status. This is ostensibly directed against pro-Palestinian groups, but could be used to suppress the free speech and activism of climate organizations and others.
Blocking State Regulation of AI. The bill prohibits any state or subdivision from passing “any law or regulation regulating artificial intelligence models, artificial intelligence systems, or automated decision systems during the 10-year period beginning on the date of the enactment of this Act.” It requires the repeal of any such laws already on the books. According to The Lever, the language could be stretched to block efforts by local governments to regulate private equity firms and other landlords using AI software to jack up rents.
Gutting the Estate Tax. As if the current exemptions were not enough, the bill raises the no-tax floor to a staggering $15 million for single people and $30 million for couples in 2026. So a couple could leave $29.99 million to their heirs, tax-free. As recently as 2001, 2.1 percent of estates paid some tax. With this change, the percentage falls to less than 0.08 percent.
Weakening the Child Tax Credit. The bill nominally increases the current Child Tax Credit from $2,000 to $2,500 per child. But it also lowers the eligibility income threshold, making millions of children ineligible. The bill also excludes from the credit 4.5 million children who have a parent without a Social Security number but who pays taxes with a tax identification number. These children are predominantly U.S. citizens with an immigrant parent.
Expanding School Vouchers. The bill gives $20 billion in the form of tax credits to donors who give money to voucher schools. It also creates a tax shelter from paying capital gains taxes to donors who give appreciated stock to voucher schools. These two provisions amount to a direct federal subsidy to voucher schools using wealthy individuals as a pass-through. This government support for voucher schools comes at a time when Department of Education support for public schools is being slashed.
Stealth Cuts in the Affordable Care Act. The bill allows tax credits that subsidize ACA premiums to expire at the end of 2025. The result will be that out-of-pocket costs for insurance under the ACA will become more expensive and millions of people will lose coverage.
And … Support for Gun Silencers. Buried deep in the bill is a provision that repeals the $200 excise tax on the sale of gun silencers, which have no lawful purpose other than concealing shootings.
Most of these measures violate the principles of the budget reconciliation progress, which holds that reconciliation is limited to budget and spending and that ordinary legislation is not permissible. Many senators are unhappy with the House bill, and the Senate rules on germaneness are tighter, thanks to the Byrd Rule, which holds that “extraneous” matters may not be included in a budget bill. As the House bill heads for the Senate, the circus will continue.
But the bill will likely pass with most of the cuts intact. And as the unpopular cuts bite, the Republican Party must be held responsible in the court of public opinion.
Robert Kuttner is co-founder and co-editor of The American Prospect, and professor at Brandeis University’s Heller School.
The American Prospect is fiercely independent and reader-funded. Your support directly funds our team of investigative reporters, fact-checkers, and editors who produce in-depth journalism that holds the powerful accountable.
If you believe in reporting that informs, challenges, and inspires, there are two key ways to support us:
• Donate to keep our nonprofit newsroom strong and fearless
• Subscribe to our award-winning print magazine and receive our hard-hitting reporting and analysis in your mailbox 6 times a year