House GOP Demands IRS Cuts to Pay for Israel Aid

House GOP Demands IRS Cuts to Pay for Israel Aid

House Speaker Mike Johnson
Sipa USA
By Yuval Rosenberg and Michael Rainey
Monday, October 30, 2023

Good Monday evening! Congress is set to kick off a series of spending fights this week. Here’s what’s happening.

House GOP Calls for IRS Cuts to Pay for $14.3 Billion in Israel Aid

House Republicans on Monday released their bill to provide $14.3 billion in emergency aid to Israel, setting up a planned vote on Thursday and a likely clash with the Senate, where the structure of the plan — and the GOP’s proposals to pay for it — are likely to run into opposition.

The House bill proposes to offset the cost of the assistance to Israel in its war against Hamas by cutting an equivalent amount of funding provided for the Internal Revenue Service by last year’s Inflation Reduction Act, one of President Joe Biden’s signature legislative achievements. That law, enacted by Democrats without any Republican support, initially provided $80 billion in additional funding over 10 years to enable the tax agency to improve its service and operations, upgrade its technology and crack down on wealthy tax cheats.

Republicans have sought to repeal that funding, and Biden earlier this year agreed to divert $20 billion of the funding to other agencies as part of his deal with then-Speaker Kevin McCarthy to raise the debt limit. “Conservatives say they are optimistic that the debt ceiling deal means the administration has demonstrated it will fold on IRS funding to approve other priorities and could be forced to do so again,” The Washington Post reports.

A pay-for that adds to the deficit: Newly elected Speaker Mike Johnson had said last week that Republicans would demand offsets for the emergency aid to Israel. “Here’s the thing that distinguishes House Republicans from the other team," he told Sean Hannity of Fox News. "We’re going to find pay-fors in the budget. We’re not just printing money to send it overseas. We’re going to fund the cuts elsewhere to do that.”

Even with the spending offset, House GOP hardliners may not line up behind the plan and at least one conservative has already come out against the aid. “I will be a NO vote,” Rep. Thomas Massie of Kentucky posted on social media. “We simply can’t afford it.”

But as Marc Goldwein of the Committee for a Responsible Federal Budget pointed out, the proposed Republican offsets would actually add to the deficit by reducing federal revenue. “Every $1 you cut IRS funding will lose about $2 of revenue,” Goldwein wrote. “So that means this bill would add about $30 billion to the deficit.”

A clash over Ukraine, too: The House bill also rejects a Biden administration call to package the money for Israel with some $60 billion in emergency aid to Ukraine. Johnson and Senate Republican Leader Mitch McConnell appear to be headed for a clash over the Ukraine aid. McConnell on Monday again pushed to combine the aid to Israel and Ukraine in one supplemental funding bill, arguing that both conflicts are part of a larger fight against enemies of democracy and America’s global leadership.

“Right now, loud voices on both sides of the aisle are suggesting that American leadership isn’t worth the cost. Some say our support for Ukraine comes at the expense of more important priorities. But as I’ve said every time I get the chance, this is a false choice,” McConnell said Monday at an event in Louisville, Kentucky.

He added an economic argument, suggesting that a Russian victory in Ukraine would imperil NATO allies, the United States’ largest trading partner, and lead to more costly American military involvement in Europe.

“I’ve spelled out how investments in Ukraine’s defense are really also investments in replenishing and modernizing America’s defense arsenal … creating thousands of good-paying American jobs in defense manufacturing… and driving historic investments in communities across the country,” he said.

The White House called the House GOP plan “a nonstarter” and criticized the push to offset national security spending. “Demanding offsets for meeting core national security needs of the United States—like supporting Israel and defending Ukraine from atrocities and Russian imperialism—would be a break with the normal, bipartisan process and could have devastating implications for our safety and alliances in the years ahead,” White House Press Secretary Karine Jean-Pierre said in a statement

“Threatening to undermine American national security unless House Republicans can help the wealthy and big corporations cheat on their taxes—which would increase the deficit—is the definition of backwards.”

The bottom line: The House bill has no chance of clearing the Senate and will instead set up the first of what are likely to be several spending fights ahead of a November 17 deadline to fund the government and avoid a shutdown. McConnell and Johnson will have their own disagreements to work out. “Beyond the next three weeks, McConnell wants to pass the regular appropriations bills before Christmas in order to boost defense spending,” The Hill notes, “while Johnson has floated the idea of freezing federal funding with a stopgap measure lasting until January or April.”

Number of the Day: $776 Billion

The U.S. Treasury expects to borrow $776 billion during the final three months of 2023, according to projections released Monday. The figure is below Treasury Department’s previous $852 billion estimate for the quarter, and below the $1 trillion it borrowed from July through September.

The reduced estimate for fourth-quarter borrowing is driven by an increase in tax revenues coming from states such as California that were granted deferrals for payments due to natural disasters. Still, both the fourth quarter estimate and the third quarter total represent record borrowing levels for those time periods.

The Treasury projects a cash balance of $750 billion by the end of the year, up from the $657 billion balance it maintained at the end of September.

Biden Administration Spending $1.3 Billion on Power Grid — and Warns Much More Is Needed

The U.S. Department of Energy announced Monday that it will spend $1.3 billion to support three power transmission projects running through six states. Funds for the federal commitment, part of a $2.5 billion “Transmission Facilitation Program,” were provided by the $1.2 trillion Bipartisan Infrastructure Law approved by President Biden in 2021.

The Transmission Facilitation Program reduces financial hurdles for electric grid construction and improvement by guaranteeing purchases of electricity over time, and by providing loans and participating in public-private partnerships in specific regions.

The three projects receiving the federal commitment are the Cross-Tie Transmission Line Project in Nevada and Utah, which will expand access to renewable energy in the West; the Southline Transmission Project, which will deliver wind energy from New Mexico to Arizona; and the Twin States Clean Energy Link in New Hampshire and Vermont, which will connect Canadian clean energy sources to New England. Together, the projects will add 3.5 gigawatts of additional capacity to the U.S. electrical grid while creating more than 13,000 direct and indirect jobs, the Energy Department said.

A call for more investment: Separately, the Energy Department released a major review of the nation’s power infrastructure, which finds that the electrical grid needs substantial expansion as demand continues to grow and the system shifts to greener sources.

“The clean energy transformation, evolving regional demand, and increasingly extreme events must all be accommodated by the future power grid,” the report says. “Significant transmission deployment is needed as soon as 2030 in the Plains, Midwest, and Texas regions. By 2040, large deployments will also be needed in the Mountain, Mid-Atlantic, and Southeast.”

Overall, the U.S. needs to add about 30 gigawatts of additional capacity to its electrical grid, the Energy Department says, with a focus on improving the ability to move power from different sources across different regions. That effort is expected to cost hundreds of billions of dollars and require a significant commitment from Congress over a decade or more.

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