WASHINGTON -- President Trump signed legislation overhauling the nation's tax system Friday morning as well as a short-term funding bill keeping the federal government open through Jan. 19 that included a waiver of across-the-board, pay-as-you-go spending cuts triggered by the tax bill.
Trump had considered waiting until January to sign the tax bill to postpone the $136 billion in across-the-board spending cuts until 2019. The cuts would have included an estimated a $25 billion reduction in Medicare funding, according to the nonpartisan Congressional Budget Office. They also could have wiped out federal subsidy payments for Build American Bonds and other direct-pay bonds.
Earlier in the week Democrats threatened to withhold support for the waiver, but they risked sharing the blame for a partial government shutdown if they did not support the stopgap funding bill it was inserted into.
The House passed the continuing resolution 231-188 with only 14 Democrats voting in support.
The Senate vote was 66-32 with 17 Democrats and independent Sen. Angus King of Maine joining 48 Republicans in support. Two Republican senators -- Mike Lee of Utah and Rand Paul of Kentucky -- went along with most Democrats in voting no.
The new measure keeps the government running through Jan. 19 and includes a new cash infusion of Medicaid funding for Puerto Rico, which faced a year-end funding cliff.
But the Senate did not vote on an $81 billion disaster aid package that passed the House and included a provision for Puerto Rico to receive tax breaks as an economic opportunity zone.
The tax bill signing officially puts into place a termination of advance refundings and tax credit bonds after Dec. 31, as well as a reduction of the corporate tax rate to 21% from 35%, which will produce significant changes in the municipal bond market in 2018.
State and local governments face new financial constraints because the legislation limits the deductibility of state and local taxes to $10,000. Homeowners will have the opportunity to deduct up to $10,000 in property taxes and either state and local income or sales taxes.
The final tax bill leaves the status of private activity bonds unchanged.
