U.S. war funding

The Biden administration is trying to combine war aid to Ukraine and Israel in one package, but republicans are trying to go another way by funding Israel separately. The house of representatives passed the republicans’ Israel-only aid bill to provide $14.3 billion in war aid to Israel and fund this by cutting funding to the Internal Revenue Service (IRS). 

The bill passed 226 to 196, largely along party lines as twelve democrats voted with 214 republicans and two republicans joined the democrats in objecting. The lawmakers rushed to push the bill through to respond to the attack on Israel by Hamas and was the first major legislative action under new republican speaker Mike Johnson. Because it combined aid to Israel with a cut to the IRS and left out aid for Ukraine, Biden has promised to veto the bill and senator Chuck Schumer, majority leader of the democratic controlled senate, said he will not bring it up for a vote in the senate. 

Biden has asked congress to approve a broader $106 billion emergency spending package including funding for Israel, Taiwan and Ukraine. It is unclear why it makes sense to bundle these three countries together as one, but Biden had claimed national security as a reason. Instead, they seem to be three completely different types of conflicts in three different parts of the world. Additional billions to Taiwan will create increased tensions with China and hardly change the geopolitical realities of the Chinese dispute. Biden has promised to continue the proxy war in Ukraine to the end in hope to have Ukraine join NATO in Biden’s quest to expand the military organization eastwards. 

The dispute between the two chambers could mean it will be weeks before congress approves any emergency spending plan. The current Israel-only bill would provide billions for Israel’s military, including $4 billion for procurement of Israel’s Iron Dome defense system to counter short-range rocket threats, as well as some transfers of equipment from U.S. stocks. Israel already receives $3.8 billion per year in U.S. military assistance under a 10-year plan that began in 2016. It might be difficult to pass any bill at this point as the republicans have a 221-212 majority in the house and the democrats control the senate 21-49. To become law, the bill would have to pass both the house and senate and be signed by Biden. 

The republican bill combined the cost of aid to Israel with cutting some funding for the IRS that democrats included in the 2022 Inflation Reduction Act. The IRS is one of the most dysfunctional government institutions and only managing a limited number of audits and controls despite a tax system that is heavily built on subjective deductions. Some argue that the tax system needs a systemic reform as only 50% of all Americans pay any tax at all and the percentage is about the same for U.S. corporations. There are too many legal opportunities for deductions and tax reductions and the system is heavily favoring assets and wealth, meaning the more your own the less you pay. No political party is favoring an overhaul of the tax system though. 

For republicans to include reduced funding of the IRS in order to fund a war in the Middle East makes no sense and seems to send a message to U.S. voters that republicans do not want the IRS to have more abilities to do audits and advance tax collection. 

Republicans are increasingly skeptical to sending more funds to Ukraine at a time of steep budget deficits. Congress has already approved $113 billion for Ukraine since the conflict began in February 2022. Johnson, who voted against Ukraine aid repeatedly before he became speaker, plans to introduce a bill combining assistance for Ukraine with money to increase security at the U.S. border with Mexico. This makes little or no sense, but the broader question is how much money the U.S. is willing to spend to support ongoing regional wars? What is the price to bring Ukraine into NATO? What is the price to defeat Hamas? It seems that the Biden administration has become a war administration and it seems advisable to focus more on domestic U.S. problems and concerns.   

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