House moderates expect Biden bill’s cost estimates to fall short

Accounting

Two key U.S. House moderates said they anticipate official estimates by congressional scorekeepers of President Joe Biden’s tax and spending plan might fall short of White House projections that it pays for itself, but they indicated that might not doom the measure.

Among the crucial differences expected between the Congressional Budget Office projections, which will be released by Friday, and the White House figures is how much money can be raised from increased tax enforcement.

“I think we’re all well aware that there’s going to be a discrepancy around the IRS piece and let’s just reserve judgment until we see the whole package,” Representative Stephanie Murphy, a moderate Democrat from Florida, said. “I think it’s really important that we don’t draw red lines within the media.”

Stephanie Murphy

Chip Somodevilla/Bloomberg

Murphy, along with four other centrist Democrats, issued a statement earlier this month that they needed CBO data on the total cost of the legislation before they could vote on it. Representative Josh Gottheimer, a New Jersey Democrat who also signed the statement, said he expects that the Internal Revenue Service enforcement revenue will fall short of the $400 billion the White House has estimated, and that has been “baked into” his thinking.

“We knew going in that that’s something there will be a difference in,” he told reporters Monday. “That was something that was raised when we were doing infrastructure,” he added, referring to the public works bill that Biden signed at the White House on Monday

Congressional scorekeepers, the Treasury Department and outside think tanks have produced wide-ranging estimates about how much in tax revenue could be collected if lawmakers were to approve an additional $80 billion in funding for the IRS. Efforts to include IRS enforcement as a revenue raiser in another package — the infrastructure bill — were scrapped early in the negotiations after Republicans said that CBO wasn’t scoring the provision high enough to make it worth it.

The House could bypass many squabbles this week if moderates don’t demand that the CBO data reflect that the total cost of the bill is 100% offset by new revenue. If moderates say they won’t vote for it unless it is entirely paid for based on CBO data, they might have to cut some spending elements or add additional tax increases.

CBO director Phillip Swagel said on Monday that the office’s estimates suggest that an IRS funding increase could net about $120 billion in new tax revenue, after subtracting the $80 billion for the IRS. That’s just a fraction of the $400 billion the White House has said could be raised.

Progressive Democrats, who requested that the moderates pledge to vote for the bill after getting the CBO data, say they remain optimistic a bill could pass this week.

“I think something with the name Build Back Better is likely to pass the House. Whether it will resemble and include the full provisions that we had a week and a half ago is something that remains to be seen,” said Representative Alexandria Ocasio-Cortez, a New York Democrat, adding that she hopes moderates don’t request any cuts if the CBO data isn’t as optimistic as the White House estimates.

House Speaker Nancy Pelosi has said the House would vote on the tax and spending package this week, but has not yet set a date. Because the CBO data may not be published until late Friday, it’s possible a vote could slip into the weekend.

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