Thread by @ParrottCBPP

The new CBO score confirms that #BuildBackBetter is fiscally sound. Thread.

First, when you adjust the CBO score by using Treasury’s higher but reasonable estimates of the revenue raised from increased IRS enforcement, #BuildBackBetter is more than fully offset over 10 years.

Second, even if you stick with the lower CBO estimates of the IRS enforcement provisions, the bill costs less than 0.1% of GDP in the first decade and substantially reduces the deficit in the second decade.

The deficit reduction in the second decade comes from the fact that the tax provisions continue to generate substantial revenues beyond the 10-year budget window while most investments are temporary.

Back on IRS enforcement, both CBO and Treasury believe investing $80B to close the tax gap will yield significant new revenues. Treasury’s estimates are higher than CBO’s but are reasonable and perhaps even conservative. cbpp.org/blog/revenue-f…

Treasury estimates revenue of $480B over the decade from the $80B investment, while CBO estimates $207B. Both are modest compared to the roughly $7 trillion gap over the decade between the taxes legally owed and taxes collected.

Former Treasury Secretary Larry Summers says Treasury’s revenue projection is a “more-than-reasonable expectation”; he estimates that added enforcement funding could raise substantially more than Treasury estimates. washingtonpost.com/opinions/2021/…

And, former Treasury Secretary Jacob Lew similarly argues that Treasury’s estimates “actually understate” the revenue savings from investing in the IRS. cnbc.com/video/2021/11/…

Two former IRS Commissioners, Fred Goldberg & Charles Rossotti, who served under Presidents of both parties, argue that conventional scores use “assumptions that are not applicable in current circumstances.” shrinkthetaxgap.com/sttg-press-rel…

That is, given the depleted state of IRS enforcement following a decade of budget cuts, “the IRS is barely scratching the surface of the tax gap,” according to Goldberg & Rossotti, so it’s questionable to assume that additional spending will yield less over time.

Neither CBO nor Treasury take into account the revenue effects of non-enforcement IRS funding, like investments in better technology and improved taxpayer services, even though they will help increase revenue collections.

In sum, the evidence is strong that the #BuildBackBetter is offset and actually reduces deficits in the second decade.

And there is no question that #BuildBackBetter's investments will pay large dividends to families & the nation as a whole by reducing poverty, broadening opportunity, improving productivity, expanding health coverage, reducing racial disparities, and addressing climate change. /