Provisions included in the Biden “Build Back Better” social spending package could add as much as $3 trillion to the federal debt over ten years if made permanent, an analysis by the Congressional Budget Office (CBO) found.
Senator Lindsey Graham (R-SC) and Representative Jason Smith (R-MO), the Republican ranking members on the Senate and House Budget committees, requested the updated scores from the CBO out of concern that programs listed as temporary in the “Build Back Better Act” will be funded throughout the ten-year period assumed by the CBO in its analyses.
Even though the “Build Back Better Act” does not currently fund them permanently, many Republicans have argued that programs such as a Child Tax Credit and universal preschool and childcare will be permanently funded by Congress.
Many Democrats, including putative moderates like Colorado Senator Michael Bennet, have called for a permanent child tax credit.
Senator Joe Manchin (D-WVA), who has not pledged to vote for the final bill, has derided those strategies as “budget gimmicks” and “shell games” to keep the apparent debt impact of the package low.
The initial CBO analysis that the “Build Back Better Act” as written would add $357 billion to the federal debt. The CBO did not score an Internal Revenue Service funding (IRS) funding mechanism, although it separately found that increased tax enforcement could lower the debt impact by up to $207 billion over the ten-year period. The new CBO estimate is the same as one provided by the non-partisan Committee for a Responsible Federal Budget (CRFB) shortly after the House unveiled the full “Build Back Better Act.”
CBO Director Philip Swagel wrote to Graham and Smith, “The largest difference between the two estimates stems from an increase in the child tax credit that ends after 2022 in the House-passed version bill.”
President Joe Biden, Speaker of the House Nancy Pelosi, and other top Democrats have argued that the “Build Back Better Act” is fully paid for and will not impact the federal debt. Treasury Secretary Janet Yellen submitted a memo to senators on Thursday repeating those claims, which were rebutted by economists across the political spectrum before the new analysis was released.
Yellen wrote, “This analysis is of a bill that the House did not pass, the Senate is not considering, and the President, who has committed to paying for permanent investment, would not sign.”
In reality, the child tax credit will be wanted to be continued by Democrats, especially while they have control of the Senate, which will not be fully paid for and will increase our debt, and our taxes, as there is no other way to pay for it.