For months, the White House has been promising that President Joe Biden’s massive social spending package would be fully paid for—that is, that tax increases and other revenue-generating aspects of the “Build Back Better” plan would fully offset the nearly $1.7 trillion in proposed new spending.
Now we know this is false.
According to a Thursday analysis by the Congressional Budget Office (an independent number crunching agency of Congress), Biden’s plan would add $367 billion over 10 years to the deficit.
Two caveats are attached to this figure: one could increase or decrease the impact of the bill on the budget deficit.
Most important, however, is the fact that $367Billion could easily be higher if it weren’t for several gimmicks in the proposal designed to manipulate the CBO scoring system. You can see the full article here. There are reasons As we have previously reported, many key elements of the plan are being applied on a temporary basis even though Congress is likely to make them permanent. Since the CBO is unable to forecast future costs, they can only project costs up to 10 years in programs that have been operational for less than a year.
These gimmicks aside, and even provisions that will increase taxes by over $1.2 trillion, this overall package fails to fulfill Biden’s pledge not to increase the deficit.
A second caveat concerns the portion of the bill that would strengthen IRS enforcement and collect taxes that are not yet paid. The White House argues that $80 billion in additional funding for the IRS will generate $400 billion in new revenue over the next 10 years—enough to fill the hole that the CBO projects the bill will create. Treasury Secretary Janet Yellen stated that the inclusion of this additional revenue “will make it clear that Build Back Better has been fully paid for” in a statement released Thursday night after the CBO analysis.
It is nearly certain that this bill will be a sham. CBO separate evaluation of bill component that deals with increased IRS enforcement projects just $207 billionAs a result, there has been an increase in revenue. Also, it’s important to remember that many other attempts to close the so-called tax gap have failed far short of our expectations. There are reasonsMatt Welch, a member of the Advisory Board at UC Berkeley has explained previously.
Even if you include that extra $207 billion in new revenue, the CBO’s final assessment means the bill would add about $160 billion to the deficit—and that’s before extensions of those temporary provisions, which could double the overall cost of the package, according to the Committee for a Responsible Federal Budget.
That may be a short-term difference. Speaker of the Houe Nancy Pelosi (D–Calif.) told reportersThe House will vote on the bill on Thursday night, which is likely to happen.
However, the CBO’s review of the bill may further complicate Build Back Better’s chances of success in the Senate. Two Democrats already cited concerns about the federal budget as part of their opposition for the spending plan.
While the CBO’s long-awaited analysis of Build Back better is not the end of this discussion, it clearly shows that Biden has a spending plan. Will increase the deficit—despite the fact that Democrats have tried to put their thumbs all over the scale.