That’s because government forecasters have long considered those savings too iffy to be relied upon. “No increase in receipts or decrease in direct spending will be scored as a result of provisions of law that provide direct spending for administrative or program management activities,” the rule says. It prevents lawmakers from incorporating into calculations of how much legislation costs any savings from increasing IRS audits or other “program integrity” initiatives across the government designed to make programs more cost-effective - such as cracking down on fraudulent Social Security disability payments. But they ran into what proved to be insurmountable procedural hurdles in the Senate and weren’t able to include it.įor Democrats, the problem is budget scorekeeping rule No. The quandary facing Democrats is reminiscent of one Republicans confronted when they were working on their 2017 tax cuts.īack then, they wanted to use dynamic scoring - which takes into account the macroeconomic impact of tax changes - to help cover the cost of their plan. Republicans, sometimes blamed for exacerbating the tax gap with years of tight IRS budgets, now say they are open to helping the agency go after unpaid tax bills, though some are skeptical there's as much out there as Rettig says. Improving tax collections is also an area of potential bipartisan compromise as the two sides explore whether they might be able to work together on an infrastructure plan. Sheldon Whitehouse (D-R.I.), in a hearing last week on the tax gap.
“I’ll note that budget scoring rules block Congress from using that high-return investment as a pay-for – that needs to change,” said Sen. If Democrats can’t use that money to pay for their plans, they may have to turn to more controversial alternatives, such as even more tax increases or adding to the deficit. While some lawmakers are skittish about raising taxes, few object to the idea of expanding IRS enforcement, especially after Commissioner Charles Rettig speculated last month that the annual tax gap - the difference between what’s owed and what’s actually collected - might run as much as $1 trillion annually. Going after uncollected taxes is among the politically easiest money Democrats are likely to find when it comes to paying for their big-ticket spending packages. “Hundreds of billions of dollars are on the table, and revenue is revenue.” “The revenue generated from going after wealthy tax cheats should be counted toward the revenue needed to pay for critical investments in the American people.” “This is an issue we’re looking at closely,” said Senate Finance Chair Ron Wyden (D-Ore.).
Lawmakers are now discussing ways around the rules, with some pushing to overturn them. If they can’t tap that, it could blow a big hole in their budget numbers. They are relying on greater IRS enforcement to contribute billions toward the cost of their plans. It’s a crucial problem Democrats are now confronting behind closed doors.
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