Spending Will ‘Actually Reduce’ Deficits
President Joe Biden’s plan for the feds to spend $1.75 trillion would “reduce annual deficits,” Treasury Secretary Janet Yellen said in testimony to the Senate Banking Committee.
Calling Biden’s “Build Back Better” plan “the right economic decision,” Yellen told the committee on Monday, it would “end the childcare crisis in this country” by “letting parents return to work.”
“These investments we expect will lead to a GDP increase over the long-term without increasing the national debt or deficit by a dollar,” Yellen claimed. “In fact, the offsets in these bills mean they actually reduce annual deficits over time.”
Yellen was referring to the plan’s proposal to spend $273.5 billion on childcare through 2031. The offsets Yellen referred to include, in part, a 15 percent domestic minimum tax on corporations; reducing the deductibility of business losses; and higher taxes on investing. It also includes an assumption that increasing IRS audits among all taxpayers would result in greater yields, estimated by the Congressional Budget Office at $150 billion annually.
The federal deficit totaled $2.77 trillion in fiscal 2021, according to Treasury Department data, the second-highest figure in history after 2020, when the number reached $3.13 trillion. National debt as of Dec. 1 stood a little higher than $29 trillion.
Congress raised the debt limit by $480 billion in October, though Yellen has asked Congress to raise it again by Dec. 15 to avert a federal default.
Watch above via the Senate Banking Committee.
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