Former Treasury Secretary Lawrence Summers has expressed hope the debt ceiling agreement between President Joe Biden and House Speaker Kevin McCarthy would pass Congress but indicated he is skeptical about the provisions regarding the Internal Revenue Service (IRS).
“I am glad that the #DebtCeilingCrisis has been resolved and hope and trust #Congress will act. I think however the #IRS provisions are a grave error,” he said in his tweet.
Summers pointed out that although the policy design differs from what he would prefer, he is comfortable with the changes in work requirements and spending. “I think permitting reform is a policy imperative,” he said.
IRS Funding: The former Treasury Secretary, however, criticized the terms regarding IRS funding.
“The rescinding of #IRS funding will raise future deficits by more than $100 billion and risks a compliance crisis and privileges rich tax cheats. I desperately hope it will not set a precedent,” Summers said.
The Democrats had included $80 billion to help the IRS hire thousands of employees and update its technology in the Inflation Reduction Act, according to a report by The New York Times. However, the debt ceiling agreement would immediately rescind $1.38 billion from the IRS and eventually repurpose another $20 billion from the $80 billion it received, the report said.
The economist is not the only person to sound critical of the IRS provisions. Harvard professor and noted economist Jason Furman had stated that the funding reduction is particularly galling especially since it will increase the deficit. “It should not be repeated ever again,” he said in his tweet.
In a preceding tweet, Furman argued that the debt ceiling ought to be eliminated and for a “much stronger set of norms against brinksmanship and hostage taking.”
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Edited by Alberto Arellano and Sterling Creighton Beard