Debt deal sacrifices $140 bln return on investment
The author is a Reuters Breakingviews columnist. The opinions expressed are their own. Refiles to fix story code.
WASHINGTON, May 30 (Reuters Breakingviews) -The U.S. government could soon shrink one of its most promising investments. The budget deal agreed to by President Joe Biden and top congressional Republican Kevin McCarthy would move $20 billion away from the Internal Revenue Service over the next two years. The change shores up cash for other agencies, but projections suggest the IRS funding would’ve made a significant step toward closing the government’s $925 billion budget gap.
Biden approved $80 billion of new cash for the IRS in 2021, arguing the funding would strengthen enforcement and increase revenue collected by Uncle Sam. The non-partisan Congressional Budget Office backs that assertion. The CBO estimated in 2021 that for every $1 increase to IRS funding the government would recoup $6.40 to $7.10. The $20 billion being diverted from the agency could therefore raise as much as $142 billion through 2031.
White House officials have said the deal shouldn’t weaken tax collection. That’s unhelpful. The shift erodes one of the most obvious solutions to the government’s deficit problem: Improving enforcement is akin to, or even better than, raising taxes. With the deficit set to double over the next decade, America’s tax collector could use the help. (By Ben Winck)
Follow @Breakingviews on Twitter
Capital Calls - More concise insights on global finance:
Toyota governance fight gets stuck in traffic nL4N37R0P2
Saudi is a BRIC in crumbling East-West money wall nL1N37Q0CN
Aussie billionaires’ solar spat enters new phase nL1N37Q02U
Lufthansa sale is ironic end to Italy airline saga nL4N37N2G0
BYD and Great Wall feud portends potholes ahead nL4N37M2JB
Editing by Lauren Silva Laughlin and Sharon Lam
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
