OPINION:
Team Biden recently issued its first veto threat — over the House-passed legislation reeling in the 87,000 new Internal Revenue Service agents and the $80 billion given to the IRS as part of what President Biden has correctly called the Inflation Act.
The actual veto threat — contained in a Statement of Administration Position (SAP) — is a doozy. Usually, these statements are dry and detailed documents written by dry and detailed folks in the Office of Management and Budget outlining specific concerns with the legislation.
Not this one. The administration decided to go crazy with this one, starting out by claiming that “Each year the top one percent hides about 20 percent of their income from the government so they can get away with not paying any tax on it.” The word “hides” is pretty freighted. Lots of people legally shield income from taxes. There is little evidence that 20% of the income of rich people is illegally shielded.
Either way, they wrapped up the statement by announcing: “If the President were presented with H.R. 23 — or any other bill that enables the wealthiest Americans and largest corporations to cheat on their taxes, while honest and hard-working Americans are left to pay the tab — he would veto it (emphasis in the original).”
Well, now.
Every once in a while, Team Biden exposes the fact that they may know less about the government than Team Trump. This is one of those times.
First, the reason why SAPs are usually dry is that you never can really know where the legislative process might take you. It’s very possible that Mr. Biden might sign something as part of a debt ceiling or appropriations deal that drops the number of new IRS agents down to 86,000 or 10,000, and the funding number down to $40 billion.
More importantly, the legislation — which, to be clear, should be supported by all Americans — may not have much practical impact.
What are the chances that the IRS — an agency that employs about 80,000 people and spends about $14 billion each year — will be able to double in size in the next 10 years and spend an extra $80 billion over the next 10 years?
Keep in mind that as recently as last month, there are still fewer people employed in the entire United States than there were in February 2020. Experts have indicated that the United States faces a labor shortage of between 3 million and 4 million workers. Are there really 87,000 people floating around waiting to be hired as IRS agents? Probably not.
The idea that the federal government, which is chronically understaffed in agencies that require engineers or people familiar with math (like NASA or the Department of Energy), will suddenly become competitive with the private sector for workers who have “hard” skills like math or engineering seems unlikely.
How many of the 87,000 (or less) who get trained by the IRS will turn around within a year or two and use that training to make more money at accounting firms and tax preparation outfits like H&R Block?
Despite all this, Team Biden imagines that somehow the IRS will be able to ramp up, double in size, train their new hires, retain them, and hunt down tax cheats all at the same time. In fact, they are so certain about it (as the veto threat makes clear) that it is the hill on which they are prepared to die.
There is one final feature that causes some head-scratching with respect to the veto threat. It has the flavor of salting the earth with respect to the new House majority. That seems like a rookie mistake, borne out of the notion that Team Biden will never require anything from the House Republicans nor wish to speak to them politely, and therefore that particular bridge can be burned.
Unfortunately, in Washington, and particularly in the White House Office of Legislative Affairs, burning bridges is almost always a bad idea.
Finally, the strident tone of the threat certainly indicates that Team Biden knows that this issue may very well cause them trouble in the Senate. There is no reason to amplify the rhetoric if you think the legislation is a dead letter. Democratic senators facing difficult reelection efforts in places like Montana, Ohio and West Virginia might wish to give a nod to reality and reduce the aggressiveness of the cash being sent to the IRS.
Team Biden will no doubt figure all of this out at their own speed and in their own good time.
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