White House fears about the coming CBO score point to a deep perversity

White House fears about the coming CBO score point to a deep perversity

By Greg Sargent

Columnist

Today at 4:57 p.m. EST

When congressional lawmakers passed their massive 2017 tax cut, they didn’t let any niggling concerns about the deficit get in their way. The result was predictable: The deficit ballooned, even as the tax cut lavished enormous benefits on the wealthiest earners in the land.

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So it’s strangely perverse that right now, concerns about the deficit actually might get in the way of passing a bill that would reverse some of those high-end tax cuts to fund new investments in slashing child poverty, expanding access to health care and other social supports, and ensuring that the planetary home to humanity is habitable for future generations.

Politico reports that the White House is privately bracing for a less-than-optimal Congressional Budget Office score of the Build Back Better bill later this week. The CBO may conclude that BBB’s provision beefing up IRS enforcement on wealthy tax cheats will raise far less in revenue than the White House projects.

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If the CBO score does conclude that BBB will add to the deficit, moderate Democrats could get spooked into voting against it. Sen. Joe Manchin III (D-W.Va.) could use it to further chop down BBB’s spending.

To be clear, there’s no reason to expect the CBO score to derail BBB, as other reporting indicates. But it’s at least possible. And if deficit concerns did somehow sink BBB and its dramatic efforts to combat inequality and rebalance our badly out-of-whack political economy — even after such concerns were blithely swept aside to permit passage of a huge tax cut for the rich — that would be a terrible outcome.

In one sense, this may seem like an obvious point. After all, Republicans controlled Congress and the White House in 2017, and they only pretend to care about deficits when a Democrat is president, while viewing cutting taxes for the wealthy as one of the highest goods in life.

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By contrast, Democrats control Congress now, and they have vowed that BBB won’t increase the deficit. They would ensure this with a series of tax reforms in addition to beefed-up IRS enforcement, such as a corporate minimum tax, a crackdown on multinational tax avoidance, and other provisions aimed at the wealthiest in our society.

So it’s possible deficit concerns might derail this plan after not impeding the 2017 tax cut.

But in addition to highlighting the obvious “responsibility gap” between the parties, this possibility also demonstrates the problem Democrats face in having deficit-focused moderates wielding outsize power over their agenda.

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Think of it this way. If the CBO score does spook moderates, Democrats will try to work on the bill to bring its deficit creation down to zero. There was obviously no equivalent concern among Republicans in 2017, when they were largely unified behind the tax cut. By contrast, here the outsize impact of moderates over the Democratic caucus could result in losing some spending on valuable provisions.

Moreover, if after Democrats make changes to the bill the end product is still projected to raise the deficit, it’s highly unlikely to be anything close to the nearly $2 trillion impact the GOP tax cut was projected to have. And yet there’s still a danger — though it’s unlikely — that moderates could kill the plan.

And by the way, if the CBO score is disappointing, moderates might be tempted to kill or downsize the bill even though the CBO may be wrong in that projection.

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This is a complicated and arcane debate, but the bottom line is that the White House believes the CBO doesn’t have the right kind of precedent or experience to project how much increased IRS enforcement will raise.

It’s possible the very wealthy will come up with clever new ways to avoid taxes, reducing the revenue haul from beefed-up enforcement (the pessimistic view that the CBO may take). Or it’s possible that wealthy tax-avoiders will become more prone to comply once they face consequences (the optimistic view the White House takes).

Some tax experts agree with the White House on this. But here’s the thing: If moderates do assume the pessimistic scenario, and act on it, this will all but certainly be because they’re prone to assuming the mere possibility of higher deficits is politically deadly, and because they ascribe outsize importance to the consequences of deficits relative to the urgency of passing BBB’s investments in our country and people.

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Which highlights a fundamental absurdity about the whole situation.

“Congress was willing to look the other way when the tax cut added almost $2 trillion to the deficit to cut taxes for high-income people and corporations,” Howard Gleckman, a senior fellow at the Tax Policy Center, told me. “It is much less willing to look the other way on a bill that raises taxes on high income people and corporations, and uses the money to expand the social safety net.”