First up, the Bronx’s Rep. Ritchie Torres:
The centrist New Democrat Coalition announced its support:
Despite a divided government, President Biden has achieved a bipartisan agreement that will save our country from default until 2025 and protect our nation from economic collapse, while also preventing cuts to key programs that millions of Americans rely upon.
Ron DeSantis is opposed: “Prior to this deal, our country was careening towards bankruptcy, and after this deal, our country will still be careening towards bankruptcy, and to say you can do 4 trillion of increases in the next year and a half, I mean, that’s a massive amount of spending.” Weirdly, I’m still not seeing any reaction from Donald Trump.
Republican Senate Minority Leader Mitch McConnell finally speaks up, and is in favor of the deal:
McConnell’s backing guarantees it will pass the Senate easily. I’d guess 10 to 15 of the worst MAGA Republicans will vote against the deal, but theirs will be a purity protest vote and nothing more. The whole ballgame is in the Republican House.
In a Twitter thread, Washington Post columnist Catherine Rampell analyzes the IRS funding rescission:
Here’s my attempt to explain what happened with IRS funding rescissions. TLDR: Not good for deficits, since IRS money has very high return on investment. But the effects are sort of real and also sort of an accounting gimmick, at least in the early years.
Background: Last year Dems gave $80B to the IRS, to be used for enforcement efforts, IT upgrades, customer service, etc. The money (part of the IRA) was desperately needed. See this thread.
This $80b was made available over the course of a decade, but it was not specifically divvied up by year. So theoretically, IRS could have used anywhere between $0 or $80b right away, depending on what made the most sense for long-term planning.
Basic objective of this structure was that having a big, reliable funding source gave the agency some flexibility to plan. In the past, wild swings year to year in funding made it hard to plan/execute longer-term investments that had to be made in phases, such as IT overhauls.
In this new Biden-McCarthy debt limit deal, roughly $20B of the $80b is officially being rescinded. 25% is not exactly a small chunk.
For accounting purposes, rescissions are being counted as $10B coming out of FY24, $10B from FY25. In each of those yrs, the rescissions are being used as offsets against other discretionary spending priorities. They “freed up” $10B from IRS to be spent on other stuff each yr.
But that’s kinda just on paper. The “savings” don’t literally have to come via withdrawing IRS dollars that would have otherwise been spent this year (or next). IRS can still access its balance of ~$60B ($80b minus $20b), asap. Again, the timing of the spending remains flexible.
In theory this means whatever IRS had hoped to spend money on in upgrades, hires, etc. this year & next, it can still do, so long as that spending in aggregate is <$60B. Which it’s likely to be in the near term. The agency can only spend so much in a year! Takes time to hire etc.
Effectively, that means the cuts to IRS funding can come at the back-end of the 10-year budget window, even if for official budget-recording purposes the cuts are being “counted” as coming out FY 24/25 budget.
The key to fixing this compromise, obviously, is to win future elections. But the good news is that in the short term, this won’t affect the IRS’ ability to go after tax cheats. The $80 billion was a 10-year allocation, and we’re only in the second year.
Newt Gingrich has thoughts.
Of course, Republicans didn’t cut spending—the deal increases spending because of ever-growing Pentagon budgets. (Some people claim those increases are related to Ukraine, but I see no evidence that is true.) Work requirements? Age limits were slightly lifted on food stamps but not other government programs, as Republicans wanted. And SNAP benefits have been expanded, for the first time, to the homeless, veterans, and—I just learned this one today—foster youth. And they certainly didn’t cut the deficit, as they refused to revisit the Trump tax cuts for the wealthiest.
Still, it’s good seeing Republicans try to sell the deal to their own people, as bullshitty as their arguments might be, as we do need this thing to pass. I’m seeing aggressive lobbying for the deal on Breitbart, while Newsmax is giving both sides of the Republican debate a platform.
Conservative sites Daily Wire and Daily Caller are both minimizing the entire deal, burying the news below the usual ’woke’ culture war tripe that drives their engagement.
Expect a ton more analysis and reaction tomorrow after the Memorial Day holiday.