Democrats have continued to make the debunked claim that their nearly $4 trillion bill is paid for, leading the Washington Post’s Fact Checker to award two Pinocchios to Treasury Secretary Yellen for repeating it, while also debunking even more claims often made by Democrats.
From the Washington Post:
Yes, Biden is relying on budget gimmicks:
“[W]e have been tracking Biden’s commitment that his spending plans would not add ‘a single penny to the deficit’ or would cost ‘zero dollars… the numbers often rely on budget gimmicks, such as only funding expansions of programs for a few years.’”
The IRS has a history of overestimating what it can achieve with greater funding:
“Ironically, the guidelines [prevent the scoring of indirect effects (such as people getting more honest because they were afraid of an audit) from spending proposals] were created in part because the IRS in 1987 greatly overestimated how much additional revenue would be raised by a big staff increase.”
CBO finds only a modest increase in compliance with greater IRS funding:
“In a Nov. 18 letter to Congress, CBO Director Phillip L. Swagel said the question of how taxpayers would react to an enhanced IRS is uncertain, with different results found in academic literature. In a September blog post, he wrote that ‘the estimate reflects CBO’s expectation that the increased enforcement activities would change the voluntary compliance rate — that is, the share of taxes owed that are paid voluntarily and on time — only modestly.’”
The Penn-Wharton Model finds that lower-income filers get hit harder by a supercharged IRS:
“‘Our reading is that richer and more-sophisticated taxpayers — those who the administration is explicitly targeting in the proposal — appear to be less responsive to the threat of audit than lower-income and less-sophisticated filers,’ said John Ricco, associate director of policy analysis [at Penn-Wharton].”
The Fact Checker finds that Secretary Yellen is cherry-picking information in order to claim that Democrats’ tax-and-spend bill is fully paid for.
“Yellen cannot pick and choose what part of the [Congressional Budget Office] CBO score she chooses to accept to claim that the CBO found that the Build Back Better bill is deficit-neutral. To her credit, when challenged, she acknowledged the difference of opinion with the CBO on modeling behavior effects. But her statements are still worthy of Two Pinocchios.”