The nonpartisan Congressional Budget Office on Thursday released its much anticipated cost estimate of President Biden’s signature social spending plan,The analysis — commonly referred to as the CBO score — said passage of the legislation would increase the deficit by more than $367 billion over 10 years. But the estimate does not include the revenue that could be generated from increasing IRS enforcement.
It comes as Democrats aim to push passage of the bill through the House this week, but some centrist Democrats have been holding out over the cost. House Speaker Nancy Pelosi hinted Thursday that the vote could be as early as that night. Several Democratic moderates had said they were waiting for the CBO score to make a final decision.
Over the past several weeks, the Congressional Budget Office had been releasing estimates on individual components of the Build Back Better Act, but the section dealing directly with how much money the legislation would raise as well as its total cost was not released until Thursday.
On Wednesday, the CBO estimated the legislation would include $1.63 trillion in spending. At the same time, changes to the tax code and other provisions would generate more than $1.26 trillion in revenue. The Congressional Budget Office said increased IRS enforcement would add another $207 billion in revenue.
Some of the CBO figures have come in lower than what the Biden administration estimated. The cost of universal pre-K and affordable child care would cost roughly $382 billion, the agency found. Both estimates put affordable housing related costs at roughly $150 billion. Other measures like the cost estimate for expanding Medicare to include hearing was nearly identical, with the CBO saying $36 billion and the White House saying $35 billion.
The CBO also estimated that a four-week paid leave included in the House version of the bill would cost $205 billion. That provision was not included in the revised White House framework.
The White House, which estimated its framework would cost $1.75 trillion has argued the legislation would be fully paid for and even claimed it would reduce the deficit over time, generating more than $2.1 trillion over 10 years.
But earlier this month, the push for the score by the nonpartisan agency took on additional attention after five House Democrats sent a letter to Speaker Nancy Pelosi saying they could not support advancing the bill until they had reviewed the information and Joint Committee on Taxation to ensure the final bill was “indeed fiscally responsible.”
Senator Joe Manchin, one of the centrist holdouts in the Senate, has also said he wants to see the analysis of legislation before committing to supporting it. He said Wednesday, “when the final bill comes out, CBO score comes out, then we’ll go from there.”
Meanwhile, theestimated the bill would rake in $1.48 trillion. But their analysis did not include how much an increased cracking down on tax evasion through increased IRS enforcement would rake in.
Money raised through IRS enforcement has been a sticking point. Democrats have proposed giving the agency $80 billion in an effort to ramp up enforcement on the wealthiest Americans. The Treasury Department estimates it would raise $400 billion over a decade, making it the largest revenue-raiser in their proposal. Some organizations and lawmakers have suggested that estimate is too conservative.
But the White House was already preparing for a bad CBO score on this front. Deputy press secretary Andrew Bates on Wednesday said that “there has been wide agreement on the part of everyone involved — moderates, liberals, et cetera — that CBO does not have experience analyzing revenue amounts gained from cracking down on wealthy tax cheats who are taking advantage of every honest taxpayer.”
The Congressional Budget Office estimated the spending would generate $207 billion in new revenue, a net increase of $127 billion, far less than the Biden administration claims. Earlier this week, CBO Director Phill Swagel explained ultimately the IRS will determine what additional resources are put toward. But he said research on how increased enforcement acts as a deterrence for tax evasion is mixed, so his office comes down closer to the middle on its impact, whereas others have taken more optimistic positions.
Another controversial component of the bill contributing to the price tag is the increase of the state and local tax deduction cap, commonly known as SALT. Some moderate House Democrats insisted an amendment be added that will increase the current SALT cap from $10,000 to $80,000.
The Biden administration did not include SALT in its framework. The provision is estimated to be one of the most expensive pieces of the legislation and analysis shows it vastly benefiting the wealthy over middle-income Americans.
While those backing increased deduction argue, the cap set as part of former President Trump’s 2017 tax law unfairly hurts their constituents, it has become a point of contention among Democrats and faces obstacles in the Senate.
“It’s bad politics, it’s bad policy,” said Senator Bernie Sanders on Wednesday. “The Democrats correctly have campaigned on the understanding that amidst massive income and wealth inequality. We’ve got to demand that the wealthy start paying their fair share of taxes.”
But in the House, Democrats are moving full speed ahead. House Speaker Nancy Pelosi on Thursday said the SALT cap penalized states that provide services to their people. “We’re not going to have our states with their hands tied behind their backs” because of the tax law under Mr. Trump, which limited the deduction, she said.
Pelosi conceded the social spending package passed by the House will likely differ from the plan approved in the Senate but said the legislation ultimately what is sent to Mr. Biden’s desk will be “transformative and historic.”
Jack Turman contributed to this report.