Democrats expect CBO to show shortfall on Biden’s bill as White House moves to ease concerns
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Democrats expect CBO to show shortfall on Biden’s bill as White House moves to ease concerns

The White House and top Democrats are expecting a highly anticipated estimate from the nonpartisan Congressional Budget Office to show that their sweeping plan to expand the social safety net will fail to meet President Joe Biden’s promise to not add to the federal deficit.

But behind the scenes, they have been launching a preemptive strike for weeks to prepare their colleagues for that likelihood, arguing that the CBO numbers would diverge from the White House’s projections that $320 billion would be raised by increased tax enforcement, a difference the administration says stems from the different methods used to calculate the revenue gained.

The question now facing Democratic leaders is whether those assurances from the White House will be enough to assuage moderates, who have withheld their support for the roughly $1.9 trillion bill until information from the CBO show its costs are offset.

“I am undecided on the bill,” said Rep. Elissa Slotkin, a vulnerable Democrat from a swing district in Michigan. “I remain undecided on the bill. I want to see these scores, and I want to make sure I understand the details before I cast a vote.”

Democratic leaders have very little margin for error, since they can only lose three votes to pass the bill that they are hoping gets a final vote as soon as Thursday.

“We want to have the confidence that what we fiscally have said is the reality in the bill is the reality,” House Majority Leader Steny Hoyer said Thursday.

The White House has spent months explaining and preparing members for why their estimates may not line up with the CBO on increased IRS tax enforcement. But aides say that knowing the estimates and then seeing CBO’s report could cause some members to react differently.

“That this wouldn’t line up with CBO isn’t a surprise,” one House Democrat who has worked on the revenue side of the proposal told CNN. “If this is a deal breaker for any members, it’s because they want it to be a deal breaker, not because they weren’t aware of it beforehand.”

Administration officials hope that their argument made to lawmakers — that their estimates over the IRS enforcement provisions wouldn’t line up with those of the due to differences in methodological approaches — will carry weight with Democrats.

“If we’re telling you that we’re paying for something over a 10-year period, are we giving you that service for 10 years?” Sen. Joe Manchin, the key West Virginia moderate, said Tuesday. “Or is it for one year, four years, three years, five years? But I think other people had that same concern.”

Biden proposed the increased tax enforcement as a revenue source in negotiations over the bill that would become the $1.2 trillion infrastructure law, before dropping it after Republican objections. It then became a central component of the revenue side of the second piece of Biden’s domestic agenda — the Build Back Better Act.

For months, the Treasury Department has laid out their data and research backing their conclusion the $80 billion dedicated to enforcement would net out to raise $320 billion. Embedded in those estimates has been an implicit critique of what the CBO would likely estimate.

Administration officials have pointed to the indirect effects the enhanced enforcement would have, something that historically has been difficult for the CBO to score. Improvements in outdated technology infrastructure and taxpayer services are also difficult to account for, administration officials have told lawmakers.

“When analyzing proposals that provide increased enforcement resources to the IRS, the conventional approach is to merely estimate the increased revenue collected by the IRS through additional audits and additional collection activities, but not to ascribe any changed behavior on the part of taxpayers who potentially would be subject to added enforcement scrutiny,” Mark Mazur, then the acting assistant treasury secretary for tax policy, wrote in a September memo circulated to lawmakers. “This convention leads to an underestimate of future revenues generated by the proposal.”

Mazur’s analysis, along with several derived from outside sources, have been circulated to members throughout the last several months as Biden’s negotiators have made the case for the provision, officials said.

How moderates react to the shortfall will remain a key question this week.

“We know what we are expecting on these different lines,” said Rep. Josh Gottheimer, a New Jersey Democrat. “We have been talking back and forth with the White House and Treasury for 10 days.”

Earlier this month, five moderate Democrats signed a letter to leadership pledging they’d be ready to vote on the Build Back Better plan once they received “fiscal information from the Congressional Budget Office” and “no later than the week of November 15th,” but one member who signed onto that letter, Rep. Stephanie Murphy of Florida, told CNN Monday night that she still wants to see more estimates before she votes.

“The CBO estimates that we received today amount to about $70 billion, so I think there is still some more CBO estimates that we’ll need to take a peak at,” she said.

While the CBO is expected to roll out estimates for each section of the bill as they have them, the CBO said on Monday that “a complete cost estimate” would be ready “by the end of the day on Friday.” If that timing holds, it could push back Hoyer’s hope to vote Thursday or during the day on Friday.

One senior aide to House moderates warned that a CBO score that came back showing the bill was much more than $100 billion away from meeting the budget neutral target would be a “big problem.”

“You don’t want to f*** up your messaging,” the aide said.

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