The House GOP plan to offset $14.3 billion in aid for Israel by slashing the same amount of funds meant for the Internal Revenue Service (IRS) would add to the federal deficit, according to a new analysis.
A cost estimate released by the Congressional Budget Office (CBO) found the proposed $14.3 billion cut to IRS funding would “decrease revenues by $26.8 billion over the 2024–2033 period, resulting in a net increase in the deficit of $12.5 billion over that period” if enacted this month, relative to CBO’s May 2023 baseline.
The analysis by the nonpartisan agency gave congressional Democrats more ammunition to criticize the GOP measure, which they had claimed would benefit rich tax dodgers. “Shocking! Turns out letting wealthy people and corporations evade their taxes isn’t fiscally responsible,” quipped the X account for the House Ways and Means Committee Democrats.
New House Speaker Mike Johnson (R-LA) indicated the plan was meant to be a starting point for negotiations with the Democrat-controlled Senate, describing it as a “first draft” during an interview with Fox News. He also said the United States is “not just going to print money and send it overseas” and that he believes the American people would say that “standing with Israel and protecting the innocent over there is in our national interest and is a more immediate need than IRS agents.”
President Joe Biden asked Congress to approve roughly $106 billion in national security-related funds, including $14.3 billion for Israel — which is now at war following Hamas’ deadly terrorist attacks on Israeli soil earlier this month. Biden’s request also sought $61.4 billion for Ukraine in its fight against Russia, as well as money for Taiwan and the Indo-Pacific, humanitarian assistance, and border security.
Some GOP lawmakers in Congress have called for stand-alone bills and demanded more fiscal oversight. Others have signaled they are open to linking financial assistance packages. Minority Leader Mitch McConnell (R-KY) delivered remarks on the Senate floor on Tuesday in which he said threats to the United States are “intertwined” and called on Washington to rally behind its allies. A bipartisan, 60-vote coalition is needed to overcome a filibuster in the upper chamber.
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IRS Commissioner Daniel Werfel reportedly said the proposed offset for Israel aid would cost $90 billion, according to Washington Post reporter Jacob Bogage, who conveyed the comments in a post to X on Tuesday. “All of those funds go to increased scrutiny on tax evasion going on at the highest wealth levels,” Werfel said, adding that the IRS would be “leaving money on the table.”
The House GOP proposal aims to further cut the budget of the IRS after Biden secured $80 billion through the Inflation Reduction Act to bolster and modernize the agency over ten years — with an agenda to commit more than half of the money to enforcement, particularly in going after wealthy tax evaders — only for up to $21.4 billion to get clawed back as part of a debt ceiling deal in June. A preliminary CBO analysis estimated a $21.4 billion IRS cut would increase the deficit by $19 billion over ten years because of lost revenue.