The CBO, which has rules about counting effects from increased appropriations, does not formally credit the IRS provision with raising any revenue in its tables and in a footnote projects that giving the IRS $80 billion in further funding would net just $127.2 billion in possible revenue. Even that inflow wasn’t included in the overall revenue-raising tally, because of particular budget-estimating rules, the CBO said. Using CBO’s own estimate of tax enforcement the bill would only add $160 billion in deficits.
The CBO score will, however, give ammunition to Republicans—who are attacking the bill by arguing it will increase inflation, stifle job creation and foster dependency on the government, in addition to saying it will add to the national debt.
“It is no secret this bill is too extreme, too costly, and too liberal,” McCarthy said on the House floor.
The White House continued to assert that the bill’s revenue is enough to pay for new spending.
“The combination of CBO’s scores over the last week, the Joint Committee on Taxation estimates, and Treasury analysis, make it clear that Build Back Better is fully paid for, and in fact will reduce our nation’s debt over time by generating more than $2 trillion through reforms that ask the wealthiest Americans and large corporations to pay their fair share,” Treasury Secretary Janet Yellen said in a statement.
The CBO’s spending estimate cannot be directly compared with the $1.75 trillion top-line number that the Biden administration has used when presenting its framework, or a revised White House estimate that the House bill, when paid family leave and other benefits are added, amounts to a $2 trillion “investment.” The CBO doesn’t consider money spent on tax credits in their top-line spending figure, but rather counts them as lost revenue.
Even if the bill passes the House, there is no guarantee it can clear the Senate—where Democrats have yet to line up the 50 votes they need to pass it using a filibuster-proof budget process known as reconciliation.
The Build Back Better proposal, as Biden’s plan is known, would provide universal pre-K, childcare subsidies, four weeks of subsidized paid family leave, subsidized Obamacare premiums and an alternative to Medicaid in some states, and would allow Medicare to negotiate prescription drug prices for the first time while capping out-of-pocket costs for seniors.
The CBO estimated that allowing Medicare to negotiate some drug prices will save $79 billion over a decade, but result in one fewer drug being brought to market over that time and four fewer in the following decade.
The program aims to fight climate change by imposing a fee on methane and providing a slew of tax credits for renewable energy and electric vehicle purchases, and it would provide relief from deportation for millions of undocumented immigrants.
On the tax side, the bill would extend expanded child tax credits and make them permanently refundable to those without sufficient income-tax liability to get the full benefit. It would also increase the cap on federal deductions for state and local taxes. To raise revenue, it would impose a new 15% corporate minimum tax and a 5% surtax on individual incomes over $10 million, with an additional 3% tax above income of $25 million. There are also taxes on large individual retirement accounts, stock buybacks and nicotine.
—With assistance from Jarrell Dillard, Laura Davison and Steven T. Dennis.
This article was provided by Bloomberg News.