Democratic leaders assured the U.S. public that a budget deal keeping non-military spending at its 2023 level would "protect key domestic priorities," but economists and economic justice advocates on Monday criticized the party for appeasing the GOP and permitting the inclusion of its top objective: accelerating cuts to the Internal Revenue Service in order to benefit wealthy tax evaders.
The deal, which provides $772.7 billion for "non-defense discretionary funding," also includes a provision allowing $10 billion in funding cuts to the IRS—which the GOP insisted upon last year in the so-called Fiscal Responsibility Act to raise the debt ceiling—to go into effect in 2024 instead of 2025.
Rebuking a statement from Senate Majority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Hakeem Jeffries (D-N.Y.), who said the deal will "maintain important funding priorities for the American people and avoid a government shutdown," the Center on Budget and Policy Priorities (CBPP) warned the agreement is "at best a funding freeze at a time when costs have risen, meaning that public services that people and communities count on will be cut."
Sharon Parrott, president of the progressive think tank, said that while Democrats rejected "further, deeper cuts that some House Republicans demanded"—a "critical" move—the acceleration of IRS funding cuts in the deal was "deeply unfortunate."
With the provision, said Parrott, the deal puts "tax cheaters' interests ahead of honest taxpayers."
"Any further cuts to the IRS should be rejected," she added. "House Republicans continue to create showdowns they claim are about spending and deficits, only to demand IRS funding cuts that would weaken tax enforcement, allow for more unlawful tax cheating, and increase the deficit."
Critics have warned that slashing IRS funding will not only make it more difficult for the government to stop tax evasion by the rich—costing an estimated $38.1 billion in lost tax revenue, according to a Center for American Progress (CAP) analysis—but will also make it more difficult for working people to access IRS services.
"Says a lot that this is a top conservative priority," said Bharat Ramamurti, former deputy director of the National Economic Council.
The 2022 Inflation Reduction Act increased IRS funding, noted David Kass, executive director of Americans for Tax Fairness last week, cutting wait times and adding services for taxpayers "while simultaneously allowing the IRS to recoup funds from super-rich tax cheats."
Yet "Republicans continue to be laser-focused on a single issue—protecting the wealthiest from paying their fair share in taxes," Kass said. "Republicans continually shout about the size of the deficit, using it as an excuse to try to cut services that Americans rely on. Yet according to the Congressional Budget Office, cutting the IRS budget costs our country billions. Why then, would Republicans work so hard to slash this funding and add to the deficit? We know the answer: to protect mega-rich tax cheats rather than helping hard working Americans."
Bobby Kogan, senior director of federal budget policy for CAP, pointed out that the deal finally reached by Republicans and Democrats includes about $32.5 billion in "real spending offsets"—less than the amount of government revenues that are lost when the IRS loses funding to hold tax cheats to account.
"For every $1 the IRS spends auditing wealthy tax cheats, America sees $22 in return," said campaign group Groundwork Action. "MAGA math doesn't add up."
"Appeasing Republican extremists with cuts to the IRS," the group added, "is both fiscally and morally irresponsible."
