Tally by budget office may hurt $1.85T bill

President Joe Biden’s pledge to fully pay for his $1.85 trillion social policy and climate spending package depends in large part on having a beefed up IRS crack down on tax evaders, which the White House says will raise hundreds of billions of dollars in revenue.

But the director of nonpartisan Congressional Budget Office said Monday that the IRS proposal would yield far less than what the White House is counting on to help pay for its bill — about $120 billion over a decade versus the $400 billion that the administration is counting on.

A formal tally is expected to be released Friday, but the projection by Phillip Swagel, who heads the budget office, could pose another setback for Biden’s domestic policy legislation, which is already facing steep hurdles in the House and Senate.

The White House has begun bracing lawmakers for a disappointing estimate from the budget office, which is likely to find that the cost of the overall package will not be fully paid for with new tax revenue over the coming decade. Senior administration officials are urging lawmakers to disregard the budget office assessment, saying it is being overly conservative in its calculations, failing to properly credit the return on investment of additional IRS resources and overlooking the deterrent effects that a more aggressive tax collection agency would have on tax cheats.

“In this one case, I think we’ve made a very strong empirical case for CBO not having an accurate score,” Ben Harris, the Treasury’s assistant secretary for economic policy, said in an interview. “The question is would they rather go with CBO knowing CBO is wrong or would they want to target the best information they could possibly have.”

The CBO tends to believe that the tax collection prowess of more enforcement agents will wane over time, while the White House assumes that taxpayers will become more compliant with the IRS when they see tax dodgers facing consequences.

Such estimates are crucial to Biden’s ability to get the next leg of his agenda through Congress. Lawmakers have to rely on the budget office’s so-called score, which estimates whether the spending will add to the federal budget deficit over the next 10 years.

A disappointing assessment that shows the bill adding to the deficit could prove problematic. A group of moderate