With Armageddon Scheduled to arrive around the first of next month, it seems like a good time to start those debt limit negotiations. President Biden, of course, says that he will not negotiate on raising the ceiling; only a “clean” raise will do.
but the president too guest House Speaker Kevin McCarthy, R-Calif., will join him at the White House to talk seriously about the looming crisis. So make sure you keep things straight: those conversations Biden wants to start? definitely not a negotiation. Let’s just call them discussions aimed at reaching an agreement. That will make a world of difference.
As Biden begins to no-deal with McCarthy, he will almost certainly be forced to consider items on the GOP’s current wish list, also known as the Limit, Save, Grow Act of 2023 (H.R. 2811). Passing the House by a very narrow margin last week, the bill promises to deliver a $4.8 trillion deficit reduction over 10 years, most of the new federal spending limits, and the repeal of several energy tax credits. .
Another feature of the Limit, Save, Grow Act would drastically reduce IRS funding. The bill recovers most of the $80 billion allocated to the agency by the Reduced Inflation Act of 2022 (PL 117-169). Repealing that funding has been a top Republican priority from the moment it was signed into law.
But it’s counterproductive to defund the IRS when drafting legislation to reduce the federal deficit. The House majority voted to recover $71 billion from the agency, money the IRS planned to spend on tougher enforcement, better customer service and other projects. But according For the Congressional Budget Office, the funding cuts will affect the agency’s ability to collect taxes. The result: $180 billion in lost revenue over the next 10 years.
That’s next-level brilliance at work: recovering $71 billion in already pledged IRS funds so you can lose $180 billion in federal tax collections.
That’s exactly the kind of math that produces a $31 trillion national debt.
The IRS funding cuts are just an exercise in political swagger. Republican leaders know the IRS is an easy target and are taking full advantage of the agency’s vulnerability. But anyone who pays attention also knows that the IRS needs this money.
Over the years, the IRS has been chronically understaffed and underfunded. It has also been frequently, albeit episodically, mismanaged. But you can’t solve the last problem by exacerbating the other two, and you can’t solve management problems by simply scolding the IRS commissioner from the bench in a courtroom or by throwing one line sentences (even the good ones) on tax day.
Still, IRS budget cuts are likely to remain a top GOP priority. I’m not sure why the fiscal policy community doesn’t seem to take this threat more seriously; maybe you believe Biden when he says he won’t negotiate a debt limit increase. If so, that distinguishes those in the community from me.
I suspect Biden willpower negotiate, redoubling his notional distinction between budget negotiations and debt limit negotiations to create space for some kind of vital dialogue.
And here’s the thing: When forced to contemplate a series of unpalatable compromises as part of those debt limit no-negotiations, which compromise will Biden find most tolerable? Giving up the green energy credits that so many taxpayers and businesses appreciate (and that have turned out to be much bigger and more transformer which no one initially realized)?
Or rolling back additional funding for America’s more unloved federal agency, the IRS?
Anyone who thinks the IRS really needs that money should be worried.