Yellen spars with GOP over Biden’s budget 

Treasury Secretary Janet Yellen clashed with House Republicans during a Friday hearing as she faced some tense grilling over President Biden’s recently proposed 2024 federal budget. 

Republicans sought to charge Democrats with “reckless spending” during the hours-long hearing held by the House Ways and Means Committee, while needling Yellen proposals in the plan that pushes for about $1.7 trillion in base discretionary funding for fiscal 2024 and nearly $3 trillion in deficit reduction over the next decade. 

Five takeaways from Biden’s $6.8 trillion budget 

Ways and Means Committee Chairman Jason Smith (R-Mo.) hammered the budget plan at the top of the hearing, saying the request would mean “more pain,” while also pointing to what he called “$1.8 trillion in new taxes on Main Street businesses” and high inflation. 

He also pressed Yellen about the roughly $80 billion funding for the IRS approved in the Inflation Reduction Act passed by Democrats last year and needled Yellen over funding for the agency proposed in Biden’s annual budget request, which was released Thursday.

“You already got $80 billion for the IRS. Now you want $43.2 billion more, all without explaining what will be done with the first $80 billion,” Smith told Yellen, before asking her: “So, how many more IRS agents will this $43.2 billion get us?” 

In response, Yellen said the administration would be providing a “strategic operating plan” to lawmakers in the coming weeks and discussed the impact of the funding passed last year, which Democrats say was intended to improve services and bolster enforcement. 

“Already we’ve taken very important steps to improve customer service,” Yellen said. “The IRS has hired 5,000 additional customer service representatives.”

“I promised that the average level of service in answering taxpayers’ inquiries this tax season would rise to 85 percent, and while it varies from week to week so far, we are certainly in that 80 to 90 percent range,” she also said. “Tax assistance centers are up and operating – ones that had been closed due to lack of resources are in the process of being reopened.”

High tensions over rising debt

Yellen also went back and forth with Rep. Jodey Arrington (R-Texas), who also chairs the House Budget Committee, later in the hearing, after he pressed the secretary about the debt accrued in recent years and the impact federal spending has had on the country’s inflation. 

“Does the amount of government spending that we have been pushing out of the last couple of years, about $10 trillion, six of that it will be borrowed money that’s adding to the debt. About $6 trillion, has that contributed to this 15 consecutive months of record inflation?” he asked. 

Here’s what Biden’s 2024 budget does on taxes

“Well, I believe that that was critically important support to make sure we didn’t end up with the scarred labor force,” Yellen began to say, “at a time when the risk was —”

“So, is that a yes?” Arrington said, before again asking: “Has spending contributed to inflation, just yes or no? Forget your reasons why. You make that case to the American people.”

“We can debate that point, does spending contribute to inflation?” he asked, to which Yellen proceeded to say: “I believe that most of the inflation we’ve experienced reflects disruptions from the pandemic, the supply side of the economy.”

Rep. Linda Sánchez (D-Calif.) took a moment to honor Yellen’s appearance as the first woman to head up the Treasury, while taking aim at some members’ conduct during the hearing before addressing remarks from the other side of the aisle about jobs.

“I’m sure that as a woman working in a traditionally dominated-male field, you’re probably no stranger to breaking firsts and paving the way for other women,” she said. “Which is why during Women’s History Month, it’s disappointing to see some of my colleagues talk down to you, use profanity and not allow you to finish your answers here at this hearing and I think it’s important to call out their kind of behavior.”

The hearing comes as House Republicans are expected to introduce their own official budget plan in the coming weeks, as members call for spending reductions and fiscal reforms to be paired with action to raise the debt ceiling later this year. At the same time, leadership has drawn red lines around any tax increases. 

How Biden plans to tackle deficits

Among the proposals featured in Biden’s request to help contribute trillions toward deficit reduction in the next decade includes a so-called billionaire minimum tax aimed at imposing a tax of at least 25 percent on total income for Americans whose wealth exceeds $100 million.

Biden also called for quadrupling the stock buybacks tax,  upping the tax rate on U.S. multinationals’ foreign earnings and raising the corporate tax rate from 21 percent to 28 percent, among other proposals the administration says will help contribute trillions toward tackling the nation’s deficits. 

Here’s what Biden’s 2024 budget does on taxes

The tax pitch was met with fierce opposition from the GOP shortly after the budget’s release, with some Republicans raising concerns about the impact the proposals would have on small businesses and energy producers, even as Biden has doubled down on a pledge not to raise taxes on Americans earning below $400,000 annually.  

During the Friday hearing, Democrats defended the president’s budget, which would unlock funding boosts for a list of party priorities in areas ranging from housing, energy, education and more. While the request is not likely to become law, Democrats see the sweeping proposal as a framework of what the party will push for in bipartisan spending talks later this year.

“The budget that he released yesterday was important, and now we have a blueprint and we look forward to hearing what the other side has to say when at some point they might lay out their budget plan,” Rep. Richard Neal (Mass.), top Democrat on the tax-writing committee, said on Friday.

US could default on debt as soon as June: analysis

In January, the Treasury began implementing what it described as “extraordinary measures” to stave off a default, after the national debt ran up on the roughly $31.4 trillion threshold set by Congress more than a year ago. 

While it’s unclear when the country will reach the so-called X Date is unknown, the Bipartisan Policy Center (BPC), a prominent think tank, projected the U.S. could default on its debt as soon as June in an analysis last month.