Happy Thursday! Israel said its forces had killed Hamas leader Yahya Sinwar, the chief architect of the October 7, 2023, attacks that left more than 1,200 people, including 46 Americans, dead. “DNA tests have now confirmed that Sinwar is dead,” President Joe Biden said in a statement. “This is a good day for Israel, for the United States, and for the world.” Biden and Vice President Kamala Harris expressed hope that Sinwar’s death might present an opportunity to end the war in Gaza and move toward a political settlement that would benefit both Israelis and Palestinians. “Yahya Sinwar was an insurmountable obstacle to achieving all of those goals. That obstacle no longer exists,” Biden said. “But much work remains before us.”
Here’s what else is happening.
2022 Tax Gap Totaled Nearly $700 Billion, IRS Says
The Internal Revenue Service said Thursday that the tax gap — the difference between taxes owed and paid — was $696 billion as of 2022, the latest year analyzed. The agency projects that the total tax liability that year was $4.635 billion, but just $3.939 billion was paid on a voluntary and timely basis.
“The projected voluntary compliance rate of 85.0% remained about the same, but estimated true tax liability decreased, primarily due to a decrease in capital gains,” the agency said in a report.
The shortfall represents a slight decrease compared to projections of a $708 billion tax gap for 2021 (which was revised up from an initial estimate of $688 billion) — but it still marked notable increase compared with previous years. The projected gross tax gap for 2020 is $581 billion, while for tax year 2017 through 2019 it averaged $549 billion.
The nearly $700 billion 2022 gap includes $539 billion in underreported tax liabilities on returns filed on time, $94 billion in taxes that were reported on time but not paid and $63 billion owed by those who do not file their taxes on time.
Individual income taxes account for most of the annual shortfall, $514 billion. The agency expects $90 billion of the total gap will eventually be paid, leaving a net gap of $606 billion.
Treasury Says Tech and AI Helped Stop More Than $4 Billion in Fraud and Improper Payments
The Treasury Department said Thursday that it was able to prevent and recover more than $4 billion in fraud and improper payments in fiscal year 2024, a steep increase from about $653 million the prior year, thanks in large part to stepped up use of technology, including artificial intelligence. In a press release, the department said that its technology-and-data-driven efforts to identify and prioritize “high-risk transactions” led to the prevention of $2.5 billion in problematic payments. And AI helped with the identification of check fraud resulting in the recovery of $1 billion.
“Treasury takes seriously our responsibility to serve as effective stewards of taxpayer money. Helping ensure that agencies pay the right person, in the right amount, at the right time is central to our efforts,” Deputy Treasury Secretary Wally Adeyemo said in a statement. “We’ve made significant progress during the past year in preventing over $4 billion in fraudulent and improper payments. We will continue to partner with others in the federal government to equip them with the necessary tools, data, and expertise they need to stop improper payments and fraud.”
The Treasury Department says it makes 1.4 billion payments totaling more than $6.9 trillion dollars to more than 100 million people annually.
Biden Forgives Another $4.5 Billion in Student Debt, Bringing Total to $175 Billion
The Biden administration has approved another $4.5 billion in student loan debt relief for public service workers, the Department of Education announced Thursday.
The approval will benefit about 60,000 people participating in the Public Service Loan Forgiveness program, which provides debt relief for borrowers who work in fields like teaching and law enforcement, after at least 10 years of payments on educational loans. The White House said more than 1 million public service workers have received debt forgiveness under the Biden administration, a massive increase in a program that had been hounded by administrative problems for years.
“Before President Biden and Vice President Harris entered the White House, the Public Service Loan Forgiveness program was so riddled by dysfunction that just 7,000 Americans ever qualified and countless public servants were trapped making payments on debts that should have been forgiven,” U.S. Secretary of Education Miguel Cardona said in a statement. “From Day One, the Biden-Harris administration made fixing this broken program a top priority, and today, I’m tremendously proud that over one million teachers, nurses, social workers, veterans, and other public servants have received lifechanging loan forgiveness.”
A growing tally: The latest round of debt relief means that about 4.8 million borrowers have received student loan forgiveness worth more than $175 billion during the Biden administration, equal to about 11% of all outstanding student debt (see the CNN chart below).
Biden had hoped to do significantly more, but his plan to provide $400 billion in debt forgiveness to as many as 45 million people was rejected by the Supreme Court in 2023, and a modified plan intended to replace that effort has been hung up in the courts by legal challenges from Republican officials in several states.
The issue has political ramifications, with Biden receiving some criticism from supporters for failing to deliver on his major relief effort even as he provided the largest student loan debt forgiveness in history. Vice President Kamala Harris said recently that she would continue to push for loan forgiveness, but it’s not clear if the issue is playing much of a role in the 2024 election.
“We are fighting, and I’m going to continue to fight for student debt relief,” Harris said on the “Call Her Daddy” podcast. “It’s a barrier to people being able to think, even think about starting a family, buying a home. We need to give people relief.”
Fiscal News Roundup
- In the Campaign’s Final Weeks, Harris Is Keeping a Focus on ‘Blue Wall’ States – Associated Press
- Harris Vows to Be Different Than Biden in Fiery Fox Interview – Bloomberg
- Trump Tops Harris in Nate Silver’s Model Weeks Out From Election – The Hill
- U.S. Tax Gap Grows to $700 Billion as Candidates Clash Over Taxes – Washington Post
- The Biden Administration Has Canceled Student Loans for More Than 1 Million in Public Service Jobs – Associated Press
- Treasury Department Uses AI to Recover $1 Billion in Fraud – The Hill
- GOP Senator: House GOP Whip ‘Surrendering’ Before Year-End Spending Battle – The Hill
- Law Enforcement Officials Prepare for Possible Post-Election Violence in D.C. – States Newsroom
- McConnell Privately Slammed Trump as ‘Stupid’ and ‘Despicable’ After 2020 Election – The Hill
- CDC Reports Record Drop in Drug Overdose Deaths – Roll Call
- Helene and Milton Are Both Likely to Be $50 Billion Disasters, Joining Ranks of Most Costly Storms – Associated Press
- Research Funding Faces Crunch Time Post-Election – Roll Call
- Nearly $75M in Federal Grant Funds to Help Alaska Native Communities with Climate Impacts – Associated Press
Views and Analysis
- Trump Keeps Promising New Tax Cuts. Other Republicans Are Wary – Andrew Duehren, New York Times
- Trump’s Proposed Tariffs Would Fall Hardest on States in the Midwest and South – Robert McClelland and Richard C. Auxier, Tax Policy Center
- Think Hard, Republicans. You Really Want to Do This Again? – Matt Bai, Washington Post
- What Liz Cheney and Other Honorable Republicans Should Do Next – Jennifer Rubin, Washington Post
- NASA’s $100 Billion Moon Mission Is Going Nowhere – Michael R. Bloomberg, Bloomberg
- America Is Sleepwalking Into an Economic Storm – Daron Acemoglu, New York Times
- The Key Source of Cash Drying Up for Ukraine – Daniel Block, Politico
- It’s Localization, Not Globalization, for the Health of the US Economy – Christine Ngoc Ngo, The Hill
- How Fox News Loads the Dice So Trump Always Wins – Philip Bump, Washington Post