Global Economy, Debt Limit Proposal, and the Office of Environmental Justice
Tax Policy/News:
April 21: Republicans push for IRS defunding
Republican leaders in the House proposed legislation this week to strip the Internal Revenue Service of much of the $80 billion in extra funding it won in last year's Inflation Reduction Act as a gambit to reopen negotiations with the Biden administration over increasing the debt limit while calling for the Justice Department to investigate allegations by an IRS whistleblower of a coverup involving Hunter Biden's taxes.
The 320-page bill would repeal most of the extra funding dedicated to the IRS in the Inflation Reduction Act, especially the amount dedicated to extra tax enforcement, along with incentives for clean energy tax credits. The bill would also block student loan forgiveness and debt cancellation, expand work requirements for Medicaid and food stamp recipients, return discretionary spending for federal agencies to the fiscal year 2022 levels, and limit future spending growth to 1% a year. It's unlikely to be passed by the Senate, and may not even be passed by the House, but it represents a gambit by McCarthy to reopen talks with the Biden administration over increasing the debt limit, while President Biden and Democrats have called for a "clean" bill without preconditions to raise the debt ceiling to avoid a catastrophic default.
After McCarthy was elected Speaker of the House earlier this year, Republicans passed a repeal of the extra IRS funding as their first bill in the new Congress. They have also revived investigations of President Biden's son, Hunter Biden. An IRS whistleblower's law firm sent a letter Wednesday to congressional leaders alleging a coverup at the IRS of Hunter Biden's taxes and stonewalling by the Justice Department.
Lytle said the whistleblower made the allegations internally to the IRS, and through his attorneys to the Treasury Inspector General for Tax Administration and the Justice Department's Office of Inspector General.
Hunter Biden's attorney suggested the IRS whistleblower may have committed a crime.
April 19: Senators press IRS chief on offering free tax prep
The Internal Revenue Service is still studying the feasibility of offering its own free online tax preparation system, and its new leader is not ready to say yet what it will recommend, but he promised it would be released next month.
IRS commissioner Daniel Werfel testified Wednesday before the Senate Finance Committee a day after the end of what appeared to be a relatively smoother filing season compared to recent years. Earlier this week, Werfel and the Treasury Department reported that the extra funding for the IRS from last summer's Inflation Reduction Act had allowed the agency to hire 5,000 more employees to answer taxpayer questions, reducing call wait times and allowing the IRS to reopen more of its in-person Taxpayer Assistance Centers.
The Inflation Reduction Act also contained a provision providing the IRS with $15 million to study the feasibility of providing its own free tax-filing system. In addition to a number of other topics, several senators repeatedly pressed Werfel on where the IRS stood on providing such a system, but Werfel urged them to wait until the study's release.
Among them was Sen. Elizabeth Warren, D-Massachusetts, who has frequently called on the IRS to provide such a system, especially after the investigative news site ProPublica uncovered efforts by Intuit and other tax software companies to make the free versions of their programs harder to find in the IRS Free File program, or to upsell customers into paying for extra features.
"Thanks to the Inflation Reduction Act, the IRS now has the resources it needs to make tax filing free and easy," she said.
"This has been on the IRS agenda, their to-do list for decades. Back in 2003, the IRS set up the Free File program, which was a partnership with companies like Intuit and H&R Block. That was supposed to make filing free for 70% of taxpayers. But today, that Free File program serves just 2% of Americans. And that's because the tax prep companies sabotage the program. They could keep raking in money, deliberately hiding Free File web pages from Google searches and confusing eligible taxpayers by marketing other fake free programs to them, only to scam them by collecting a fee later on." She asked Werfel if he agreed that the current Free File program is a failure.
"I think that's a failure. Tax prep companies have sabotaged the Free File program. They've tricked and trapped American taxpayers into paying for alternative services that are marketed as free, but in fact, they don't make free and the result is that today, the IRS reports that Americans waste an average of 13 hours and $250 each year filing their taxes." She also pointed to a Treasury Department analysis estimating that about 12 million low-income Americans miss out on thousands of dollars in refunds because it is too expensive and too difficult to file through these supposedly free options.
The two biggest tax software providers, Intuit's TurboTax and H&R Block, no longer participate in the Free File program but they continue to offer free editions, although many taxpayers end up paying extra for more complex returns and state tax software.
Cash App Taxes also offers free tax prep, but it too isn't part of the IRS's Free File program.
Last month, a pair of Republican leaders of the tax-writing House Ways and Means Committee objected to the selection of a group called New America to carry out the IRS study on a free tax-filing system, claiming to the acting IRS commissioner that the organization has already recommended such a system in the past and would be biased in favor of a free tax prep system.
Sen. Ben Cardin, D-Maryland, raised the issue of paid tax preparation. "I appreciate the discussion you have with the ranking member and chairman in regard to direct filing and the study that's being done," he said. "I would encourage you to also include small businesses as to the impact it could have on our small business population in trying to simplify the way that they can comply with our Tax Code. I'll just point out that the authority issue is interesting because we haven't given you the authority you need to go after paid providers. And one of the issues is that particularly for low-income families, yes, there's free tax service available, but there are also paid providers that they're paying for. And we're not sure they're getting value in all these circumstances. And unfortunately, we don't have the accountability that is necessary here."
Economic News/Policy:
April 23: Dingell says McCarthy might not have votes to pass a budget proposal
Rep. Debbie Dingell (D-Mich.) on Sunday poured cold water on the idea that House Republicans could pass the budget proposal they laid out on the floor last week, seeking to cut spending while raising the debt limit.
"I'm concerned about the budget that they put forward and I'm not sure the votes for it or not," Dingell said on "Fox News Sunday."
McCarthy, who has been locked in a battle with the White House over the debt ceiling, released a budget last week that would see the debt ceiling raised over $1 trillion but also return federal spending to 2022 levels and cap growth at 1 percent annually.
The proposal from McCarthy comes as Republicans have demanded the White House commit to future spending cuts in exchange for lifting the debt ceiling, which is fast approaching sometime in the early to mid-summer.
The White House has said it won't negotiate on spending cuts, and many Democrats have urged Republicans to pass a debt ceiling increase with no string attached.
Democrats including Sen. Joe Manchin have lobbied his party to consider the spending cut proposal.
Dingell said that while she believes discussions over spending cuts are fair, she thinks getting the budget under control should not harm middle-class Americans.
April 21: Global Economy Gets Boost but Inflation Worries Linger
U.S. and European business activity rose in April at the fastest pace in about a year, a boost for the global economy but a potentially complicating factor for central banks working to reduce high inflation.
Demand for services drove the growth, according to surveys by data firm S&P Global covering U.S., eurozone, and U.K. businesses.
U.S. inflation eased to 5% in March, its lowest annual rate in nearly two years but still well above the Federal Reserve's 2% target.
The U.S. surveys of purchasing managers indicated both manufacturing and services output accelerated in April.
JPMorgan economists estimate the U.S. economy grew at a 3.3% annual rate in the first quarter.
While the U.S. economy has proven more resilient this year, most economists in a recent Wall Street Journal survey expect stubborn inflation and high-interest rates will lead to a recession in the next 12 months.
2022 '23 U.S. Eurozone Japan U.K. 40 45 50 55 60 65 Eurozone inflation stands at more than three times its target, and U.K. inflation remained in the double digits in March.
"We have no idea yet how severe the credit crunch is going to be in the U.S.," said Ian Shepherdson, chief economist at Pantheon Macroeconomics, pointing to deteriorating confidence about the economy among U.S. small-business owners.
April 20: What’s in Republicans’ sweeping 320-page debt limit proposal
House Republicans this week unveiled a sprawling 320-page proposal to raise the debt limit and are sprinting toward a vote next week.
The sweeping bill lays out a proposal to raise the debt ceiling, which puts a limit on how much debt the government can owe to pay the country's bills, by $1.5 trillion or through the end of next March, whichever comes first.
Congress is expected to have until sometime in the summer to raise the roughly $31.4 trillion cap or risk what experts say could be an unprecedented default.
Republicans have insisted any action to raise the debt ceiling be paired with significant fiscal reform, seeking concessions from Democrats in exchange for their cooperation.
After President Biden insisted on a "Clean" debt limit increase, Speaker Kevin McCarthy moved forward with his own debt ceiling bill that includes a slew of GOP policy proposals Republicans say will generate about $4.5 trillion in savings.
A large swath of Republicans supports the idea, which is similar to one the House Freedom Caucus included in its proposal to raise the debt ceiling last month.
Republicans are using the debt limit bill to try to roll back several Biden administration actions on student loans, including the ongoing loan repayment pause and a sweeping plan to provide widespread forgiveness.
“Our plan ensures adults without dependents earn a paycheck and learn new skills,” McCarthy said. “By restoring these common-sense measures, we can help more Americans earn a paycheck, learn new skills, reduce childhood poverty, and rebuild the workforce.
The bill makes good on a long-promised push by Republicans to target already approved coronavirus funds the party says have gone unspent.
ICYMI:
April 21: Biden establishes Office of Environmental Justice, blasts GOP attempts to roll back IRA
President Biden on Friday swiped at Republican calls to end clean energy tax cuts as part of a debt limit increase as he signed an executive order creating a new White House Office of Environmental Justice.
The order, which Biden signed in a Rose Garden ceremony Friday, will create the office within the White House Council on Environmental Quality to coordinate environmental justice initiatives across federal agencies.
Biden's order also instructed federal agencies to take steps to mitigate adverse climate effects on communities and requires them to notify the affected community in case of any release of toxic substances from a federal building.
During the signing ceremony, Biden also touted environmental provisions in the Inflation Reduction Act, the wide-ranging climate and infrastructure bill he signed in 2022.
Biden also slammed the recent proposal put forth by House Speaker Kevin McCarthy, which in exchange for a debt limit increase would repeal several clean energy tax credits, including provisions within the IRA. Supreme Court to examine public officials blocking people on social media GOP call for Ukraine peace talks echoes bungled progressive letter.
“The MAGA Republicans in Congress want to repeal climate protections in the Inflation Reduction Act. They’d rather threaten to default the U.S. economy … than get rid of $30 billion in taxpayer subsidies to an oil industry that made $200 billion last year,” he said. “Imagine taking all those clean energy jobs away from working-class folks all across America. Imagine turning your back on all those moms and dads living in towns poisoned by pollution and saying ‘sorry, you’re on your own.’”
"We can't let that happen," Biden added.
McCarthy unveiled the Republican proposal on Wednesday. Although it’s unclear whether the bill has the votes to pass the narrow GOP majority, it almost certainly would be dead on arrival in the Democratic Senate.
For Fun:
April 24: UAE spacecraft takes close-up photos of Mars’ little moon
A spacecraft around Mars has sent back the most detailed photos yet of the red planet’s little moon.
The United Arab Emirates’ Amal spacecraft flew within 62 miles (100 kilometers) of Deimos last month and the close-up shots were released Monday. Amal — Arabic for Hope — got a two-for-one when Mars photobombed some of the images. It was the closest a spacecraft has been to Deimos in almost a half-century.
The spacecraft also observed the little explored far side of the odd-shaped, cratered moon, just 9 miles by 7 miles by 7 miles.
Mars' other moon, Phobos, is almost double that size and better understood since it orbits much closer to Mars - just 3,700 miles away, the closest of any planet's moon in our solar system.
Deimos' orbit around Mars stretches 14,000 miles out. That’s close to the inner part of the spacecraft’s orbit — “which is what made observing Deimos such a compelling idea,” said the mission’s lead scientist Hessa al-Matroushi.
Al-Matroushi and other scientists with the UAE Space Agency said these new images indicate Deimos is not an asteroid that got captured in Mars’ orbit eons ago, the leading theory until now. Instead, they say the moon appears to be of Martian origin - perhaps from the bigger Martian moon or from Mars itself.
Amal rocketed to Mars on July 19, 2020, one day shy of the 50th anniversary of humanity's first moon landing - Earth's moon, that is - by Apollo 11's Neil Armstrong and Buzz Aldrin.