The non-partisan Congressional Budget Office on Thursday released its final cost estimate analysis of President Biden’s massive social welfare spending package, projecting the total impact would add to the federal budget deficit of $367 billion over the next decade.
“CBO estimates that enacting this legislation would result in a net increase in the deficit totaling $367 billion over the 2022-2031 period, not counting any additional revenue that may be generated by additional funding for tax enforcement,” CBO said in a release.
However, the CBO noted that if the IRS enforcement does become legislation to score the official total estimate legally, CBO estimates the $367 billion deficit is projected to come down to about $160 billion within the next decade. The CBO estimates the Democrats’ beefed-up tax enforcement of $80 billion in funding for the IRS would increase revenues by $207 billion, a net impact of $127 billion through 2031, far south of the $400 billion White House was estimated target.
Government scorekeepers traditionally exclude deterrence from their projections over the uncertainties it could add or reduce to the federal deficit. CBO director Phillip Swagel said generating how much the tax deterrence could produce is difficult to forecast, citing the inconclusive and lack of research that tax auditors can derive from tax cheaters.
Democrats and President Biden for weeks have promoted the Build Back Better Act as being “fully paid for,” claiming the new tax hike would offset the cost. However, Democrats have revealed they intend to make the costly entitlement programs of the package a permanent fixture provision that would add $1.5 trillion to deficits over the next five years and would “decrease GDP by 0.1 percentage points in 2050.”
Although the CBO score proves that Biden’s claim is a false declaration, the $367 billion deficit score is only based on Democrats’ manipulation of the rules to disguise the actual cost by providing “fuzzy math” of temporary provision being paid with the 10-year tax increase plan.
But, the White House went on defense mode this week, attacking the CBO as a way to push back their estimating finding when it was lining up to their estimates. Deputy press secretary Andrew Bates claimed the CBO, an agency his boss has called the “gold standard” of estimates, said the agency does not have “experience analyzing revenue amounts gained from cracking down on wealthy tax cheats.”
Passage of Biden’s domestic bill has been held up for months due to infighting among the two Democratic factions who sparred publicly over priorities to include and how to pay for the package, with some wanting to hold out over the inflation concern. The latest was earlier this month when moderate House Democrats from the “Blue Dog Coalition” demanded the social welfare spending bill first receive the CBO final score before bringing it up for a vote. The move only derailed once again Democrat leadership push to quickly pass the spending package before Biden went overseas for a climate summit and the upcoming election of Virginia and New Jersey gubernatorial race.
One of the moderate holdouts, Rep. Stephanie Murphy of Florida, revealed Thursday evening that she would be voting for the massive social bill, neglecting the deficit score she had rallied against just weeks prior.
“While I continue to have reservations about the overall size of the legislation — and concerns about certain policy provisions that are extraneous or unwise — I believe there are too many badly-needed investments in this bill not to advance it in the legislative process,” Murphy said in a statement. “I will work with my Senate colleagues to improve this bill, and I hope to vote on — and enact — a more streamlined version of the bill once it returns from the Senate. There is a lot of good in this bill, and as a pragmatic Democrat who wants to deliver for my constituents, I am never one to let the perfect become the enemy of the good.”
Murphy, however, voted against the House Ways and Means Committee version of the spending package in September over cost concerns. She has also long emphasized her need for a CBO score to determine the deficit cost in the weeks after.
While Murphy caved, one of the five moderates who signed onto the letter — Rep. Jared Golden (D-ME) previously raised strong objections to the tax measure. Golden kept firm to his word and became the first Democrat to announce that he would not vote for the social spending plan, citing the SALT (State and Local Tax) deduction “giveaway.”
“Many of my colleagues argue this major line item is worth accepting to pass the rest of the bill,” Golden said in a statement to the Bangor Daily Times on Thursday night. “I disagree: the SALT giveaway in the Build Back Better Act is larger than the child care, pre-K, healthcare, or senior care provisions of the bill,” Golden told Bangor Daily Times Thursday.
Meanwhile, Republicans remain unified in opposition to the social welfare package, arguing the excessive spending would exacerbate the already high inflation and damage the economy. They also argue the policies within the spending bill will discourage work, hurt the middle class more, damage businesses over the higher taxes hikes imposed, and fuel higher energy prices.
While the CBO didn’t score the package with the hidden extended provisions, the Penn Wharton Budget Model did and calculated the arbitrary sunsets that pegged the actual total cost is $4.6 trillion and would add about $275 billion to the debt over a decade.
Penn Wharton also found the IRS provision would only net $190 billion. The estimates from Penn are similar to those from the Committee for a Responsible Federal Budget (CRFB), another non-partisan organization that proposed Monday its results that if temporary provisions are to be made permanent, the actual cost will increase by as much as $2.5 trillion. The gross cost of the bill would more than double from $2.4 trillion to $4.9 trillion and estimated it would add about $200 billion to the debt.
House Democrats, despite the CBO analysis, were geared Thursday evening to quickly advance the social welfare spending bill before heading out of town for Thanksgiving break. They hope after months of infighting amongst the heavily divided party would help revive Democrats and Biden’s approval ratings following dismal off-Election Day results and help prevent a red wave sweep in the 2022 midterms by providing a new array of government services and subsidies.
If the bill clears the House, it faces a difficult road in the Senate, where Republicans will offer politically difficult amendments during the Vote-A-Rama session while Sen. Joe Manchin of West Virginia will gut the massive package to reduce the projected $367 billion deficit and the add-ons he has objected against but was largely ignored.