Trump Administration Estimates 33% Drop in Cost of CU Tax Exemption

The Trump Administration on Monday estimated that the cost of the credit union tax exemption will be $24.017 billion during the next 10 years—a 33% drop from last year.

However, the budget details the administration released Monday does not provide a reason for the re-estimate.

The budget also proposes slashing CFPB funding and placing it under the annual appropriations process.

The administration released the details supporting its FY20 budget plan on Monday. It released the spending portion of the budget last week, leading to some confusion over the legislative and technical assumptions the administration was using.

Just a year ago, the administration’s budget pegged the cost of the tax exemption at $35.79 billion between 2018 and 2027. The year before that the figure was $35.31, a whopping 32.3% increase over the estimate made in the last year of the Obama Administration.

The budget also restructures the funding mechanism of the CFPB, placing it under the annual appropriations process starting in FY21. The agency is now funded through drawdowns from the Federal Reserve Board.

The budget proposes to cap CFPB spending at $485 million in FY20, stating that equals the same amount the agency received in 2015.

The CFPB reported that it had spent $553 million in FY18.

The budget said that the spending cut would allow the agency to focus on enforcement of existing consumer protection laws.

“The Budget proposes legislative reforms to restructure and bring accountability to the CFPB,” the administration said. “The proposed reforms would reinforce financial discipline, reduce unnecessary spending, and ensure appropriate congressional oversight by subjecting the CFPB to discretionary appropriations starting in 2021.”

The administration did not provide additional information about other changes it might be proposing for the CFPB.

Republicans have proposed placing the agency under the appropriation process for several years; House Republicans have included it in a variety of bills.

However, the Senate, where 60 votes most likely would be needed for such a change, has never accepted the House proposals.

As reported last week, the Trump budget proposes eliminating the Community Development Financial Institutions program.

“The CDFI industry has matured, and these institutions should have access to private capital needed to build capacity, extend credit, and provide financial services to the communities they serve,” the administration said.

The Trump Administration has proposed eliminating the program in each of the budgets it has presented, but Congress has not accepted the plan.