Child Tax Credit Plan Pushes Democrats' Goal of Funding Boost for IRS

By Gabriel T. Rubin

CONGRESSIONAL DEMOCRATS' RESCUE PACKAGE, including a major expansion of the child tax credit, has the potential to cut child poverty in half, according to Columbia University researchers, and begin building an economic and social policy legacy for President Biden. But it has a side benefit that Democrats plan to build on in subsequent legislation: It provides the first major funding boost likely to be made permanent to the Internal Revenue Service in over a decade.

The CTC plan to provide a $250-$300 per child monthly benefit to families comes with a nearly $400 million one-year bump to IRS funding, ostensibly to ease the administrative burden of a major new program. It's the first step by Democrats to revive the beleaguered IRS, which has seen inflation-adjusted funding drop by over 20% since 2010 and the elimination of over 22% of its staff. Funding and staff for enforcement activities has dropped by around 30% over the last decade, per the Congressional Budget Office. There have been previous pots of money for handling Covid-19 stimulus payments and would be again in this legislation, but those aren't likely to be renewed, like the money for the CTC administration.

Democrats have seized on those figures and projections from former officials to argue that funding the IRS, particularly for enforcement, is cost-effective: According to a Treasury Inspector General for Tax Administration report, the IRS failed to collect from around 900,000 high-income individuals who didn't file tax returns over a three-year period, which could have resulted in nearly $46 billion in tax payments. Biden is expected to call for more money for tax enforcement in his second economic package.

Over the years, Republicans have called for cutting IRS funding for several reasons, including a controversy over inquiries into conservative nonprofits and the IRS's role in administering the Affordable Care Act. Some Republicans, like Sen. Mitt Romney, support an expanded child tax credit but are unlikely to support Democrats' version.

FORMER PRESIDENT DONALD TRUMP'S TWEETS between Election Day and Jan. 8, when he was permanently suspended from Twitter due to the "risk of further incitement," were overwhelmingly about challenging the election results, according to a new analysis by Issue One, a nonprofit that advocates reducing the role of money in politics. Trump sent more than 1500 tweets during that period, of which 60% focused on challenging the election results. Trump said the election was "rigged" 57 times, called it a "steal" or "stolen" another 57 times, and declared he "won" 25 times. Twitter flagged over 25% of Trump's tweets before banning him.

Twitter is expanding its efforts to label state-affiliated accounts in other countries next week, to all G-7 countries along with countries that Twitter has linked to state-led information operations, like Iran, Thailand and Turkey, among others. Nick Pickles, a public-policy executive at Twitter, said the company heard feedback that users want more context on accounts. That's part of why Twitter added labels to candidates in U.S. elections, especially where people didn't have name recognition. "The real benefit with this approach, because they're account-level labels, every single tweet has this context," he said. That's different from tweets labeled only if they violate Twitter's rules, like many of Trump's.

BIDEN'S CEO OUTREACH is an attempt to build support not only for the $1.9 trillion rescue package making its way through Congress, but also the recovery package that he will push later this year. The Biden team held a roundtable discussion at the beginning of the transition period with the CEOs of General Motors Co., Target Corp. and a number of labor leaders. It aims to hold these types of sessions with business leaders consistently with a diverse group of CEOs who are representative of their industry.

His meeting on Tuesday with the CEOs of Gap Inc., JPMorgan Chase & Co., Lowe's Cos. and others, included opposition from some executives to Biden's plan to raise the minimum wage to $15, but also soundbite-ready supportive statements from blue-chip executives: "We had a constructive and detailed conversation....[about] the urgent struggles of so many Americans, a path to a sustainable and equitable economic recovery, and the future of American competitiveness," said JPMorgan CEO James Dimon.

SANCTIONS ON VENEZUELA'S oil industry have had little effect on U.S. energy supplies, and U.S. refineries haven't struggled to adjust to alternative sources of crude oil, a U.S. government review concludes. U.S. imports of Venezuelan crude had been steadily declining since peaking in the late 1990s, and dropped sharply in recent years due to sanctions and the concurrent collapse of Venezuela's economy. The sanctions have had unintended consequences, however, including delays in processing financial transactions and transfers for humanitarian groups, the Government Accountability Office concluded. Secretary of State Antony Blinken has floated additional targeted sanctions to pressure Nicolás Maduro's regime.

FIRESIDE CHATS, the Franklin D. Roosevelt signature method of talking directly to the public, get revived by Biden. Nearly every president since Roosevelt has tried to mimic his success in pitching his agenda through a regular broadcast; Trump mostly replaced the tradition with his Twitter account. Biden restarted the tradition of a weekly address, pioneered by President Ronald Reagan in 1982, and the White House said the address would take a variety of forms during Biden's time in office. The format has been updated before: President Jimmy Carter hosted a radio call-in show early in his presidency.

MINOR MEMOS: "Are you a freshman at the university?" Biden asks a woman giving him a virtual tour of a vaccination site, who says she has been a registered nurse for nine years...Senate Majority Leader Chuck Schumer hunts for candy during impeachment-trial break: "Kelly, Kelly, who has the M&Ms?" he frantically asked Arizona Sen. Mark Kelly...Louisiana Sen. Bill Cassidy made known his feelings on The Wall Street Journal's decision to write healthcare as one word, tweeting out a picture with a sign spelling out "Health Care is Two Words."

Write to Gabriel T. Rubin at [e-mail]

(END) Dow Jones Newswires

02-12-21 0544ET