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Former Treasury Secretary Summers Criticizes IRS Provisions In Debt Ceiling Agreement

Summers opposes IRS funding cuts in debt ceiling deal, warns of future deficits and tax cheats' advantage.
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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.

Former Treasury Secretary Larry Summers attends the official White House portrait unveiling ceremony for President Barack Obama and former First Lady Michelle Obama in the East Room of the White House on Wednesday, September 7, 2022. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

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.

U.S. Speaker of the House Kevin McCarthy (R-CA) leaves his office to walk to the House Chambers on May 31, 2023 in Washington, DC. The House is expected to vote on The Fiscal Responsibility Act, legislation negotiated between the White House and House Republicans to raise the debt ceiling until 2025 and avoid a federal default. (Photo by Anna Moneymaker/Getty Images)

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.

U.S. Secretary of the Treasury Jacob Lew attends a personnel announcement June 10, 2013 at the State Dining Room of the White House in Washington, DC. President Barack Obama has nominated economist Jason Furman to succeed Alan Krueger as the chairman of the Council of Economic Advisers. (Photo by Alex Wong/Getty Images)

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.” 

© 2023 Zenger Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Alberto Arellano and Sterling Creighton Beard

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