While lawmakers wait for an official Congressional Budget Office score of the House’s Build Back Better bill, an independent analysis released Monday by a budget watchdog group found that the legislation would add about $200 billion to federal deficits through 2031.
The Committee for a Responsible Federal Budget estimated that the latest version of the reconciliation package includes about $2.4 trillion in spending and tax cuts and $2.2 trillion in offsetting revenue.
The White House and congressional Democrats have said that the cost of their bill would be offset — or more than fully covered. The CRFB estimates fall short of that goal largely because of the group’s projection for revenue generated by increased tax enforcement. CRFB estimates that the legislation will generate about $125 billion in net revenue through measures to beef up tax compliance, including an $80 billion, 10-year boost in IRS funding. That’s far less than the White House estimate of about $400 billion in net revenue.
CRFB also noted that extending temporary provisions in the bill could greatly increase the total cost of the legislation, adding $2 trillion to $2.5 trillion. “Whether these contribute to the debt depends on the existence or absence of future offsets,” the group said.
The group also acknowledged that the actual deficit impact “is likely to be somewhat lower” than its $200 billion estimate, depending on the ultimate cost of immigration provisions and whether some of the budget authority provided winds up being spent in 2032 or later.
A pinch from SALT? The CRFB analysis finds that Democrats’ proposed temporary increase in the cap on state and local tax deductions would raise a little revenue in the near term, but likely lower revenue over the longer term.
Roll Call’s Lindsey McPherson explains:
“The group counts Democrats’ proposal to raise the current $10,000 cap on state and local tax deductions to $80,000 through 2030, with a brief snapback to $10,000 in 2031, as both an expenditure and an offset. The provision would cost $285 billion through 2025, when the current $10,000 cap is set to expire, and raise $300 billion after that, resulting in a net $15 billion in revenue, according to CRFB’s numbers.
“That’s consistent with Democrats’ estimates that the SALT provision would raise $14 billion over 10 years, in a deliberate attempt to make the increased cap pay for itself over time. … But they note the cap increase ‘would substantially increase the cost of extending’ other individual provisions in the 2017 GOP tax law that are set to expire after 2025 ‘and thus is likely to result in lower revenue collections over time.’”
The bottom line: If the CBO’s official score does find a shortfall, the White House has reportedly committed to finding additional revenue to make up the difference and ensure that the offsets match the spending.
