Overnight Finance

On The Money — Yellen eyes $80B boost to ‘transform’ IRS

Treasury Secretary Janet Yellen is seen during a House Ways and Means Committee hearing to examine the President’s FY 2023 budget on Wednesday, June 8, 2022.
Greg Nash
Treasury Secretary Janet Yellen is seen during a House Ways and Means Committee hearing to examine the President’s FY 2023 budget on Wednesday, June 8, 2022.

Treasury Secretary Janet Yellen is readying the IRS for an overhaul of the U.S. tax collection system. We’ll also look at what Biden administration officials have to say about extending the current student loans freeze, TikTok’s crackdown on paid influencer political ads ahead of midterms, and more.  

But first, Solange Knowles is making big history.

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan LaneAris Folley and Karl Evers-Hillstrom. Someone forward you this newsletter? Subscribe here.

Yellen readies the IRS for an overhaul

Treasury Secretary Janet Yellen is preparing the IRS for an overhaul of the U.S. tax collection system made possible by an $80 billion funding boost for the agency included in Democrats’ Inflation Reduction Act. 

In a Wednesday memo from Yellen to IRS Commissioner Charles Rettig obtained by The Hill, Yellen said she’s giving the IRS six months to deliver an in-depth operational plan to figure out exactly how that $80 billion should be spent. 

  • Many Democrats have long viewed the IRS as chronically underfunded, but the $80 billion allocated to the agency has Republicans fuming. GOP lawmakers argue that the funding will be used to hire tens of thousands more IRS agents and will result in increased tax audits on those making $400,000 or less. 
  • However, Yellen has previously stated that the money should not be used to conduct additional tax audits on Americans below this threshold. In the memo, Yellen stressed again that “these investments will not result in households earning $400,000 per year or less or small businesses seeing an increase in the chances that they are audited relative to historical levels.” 
  • Still, Republicans pointed to a May 2021 Treasury report that found that a funding boost comparable to the one in the IRA could allow the Treasury to hire 86,852 new full-time employees, and have claimed that audits would increase on the middle class. 

In interviews with The Hill, law enforcement agents from the IRS criminal investigation division also pushed back against this characterization of the IRS’s work, saying that “the bulk of IRS’s tax administration work is done by civilian auditors and revenue collectors.” 

However many new civilian auditors are going to be hired, the IRS is anticipating a wave of upcoming retirements at the agency. In her memo Yellen said it was a priority “to replace the attrition that is on the horizon from the expected retirement of at least 50,000 IRS employees over the next five years.” 

The Hill’s Tobias Burns has the deets here.

LEADING THE DAY

Cardona says student loan borrowers will know ‘soon’ if payment pause extended 

Education Secretary Miguel Cardona wouldn’t say in a recent interview whether the Biden administration plans to extend a current freeze on federal student loan repayments, but he indicated a decision will be made “soon.” 

“While I don’t have an announcement here today, I will tell you we’re having conversations daily with the White House and borrowers will know directly and soon from us when a decision is made,” Cardona said during an interview on “CBS Mornings.” 

  • A nationwide pause on federal student loan payments and interest accrual is set to lapse at the end of August, after being extended several times under both the prior and current administrations since the start of the COVID-19 pandemic. 
  • Advocates and Democrats have pressed for the pause to be extended again to provide additional relief to borrowers, particularly as rising inflation has driven up the cost of goods this year. 
  • At the same time, President Biden has also faced growing pressure from advocates and members of his own party to provide broad-based cancellation of debt in the form of forgiveness of $10,000 or $50,000 in loans. 

However, administration officials have not publicly determined their plans for forgiveness or an extension of the repayment pause. Cardona was pressed about the hold-up that’s kept officials from reaching a decision thus far.  

“I can’t get into the conversations we’re having daily, but I will tell you that from day one, the president’s been very clear about making sure we’re leading with students first,” he said. 

Aris has more on this here.

CRACK DOWN

TikTok to crack down on paid influencer political ads ahead of midterms 

TikTok will label all content related to the midterms and crack down on paid influencer political ads as part of its plans to prepare for the upcoming elections, the company announced Wednesday.  

The popular video sharing app will label content identified as being related to the elections and all content from accounts that belong to governments, politicians and political parties in the U.S.  

  • TikTok’s announcement comes as other platforms, such as Meta, are rolling out plans to tackle election misinformation. Social media companies have faced scrutiny in the last few election cycles over their handling of misinformation. 
  • The app is facing another facet of scrutiny over national security concerns stemming from fears that the Chinese government could access information about U.S. users through user data on TikTok, which is owned by Beijing-based Bytedance. 

The Hill’s Rebecca Klar has more info here.

CAP IT COMING

Caps on prescription drug price hikes most popular aspect of Inflation Reduction Act: poll 

A cap on prescription drug price increases is the most popular part of the Inflation Reduction Act, the $430 billion climate, health care and tax package that President Biden signed into law Tuesday, according to a Politico-Morning Consult poll.  

The poll found that 76 percent of respondents strongly or somewhat support placing a limit on the amount that prescription drugs can increase, while only 13 percent strongly or somewhat oppose it.  

  • More than 70 percent strongly or somewhat support the law’s provisions to allow Medicare to directly negotiate some prescription drug prices and to reduce the federal deficit by $300 billion in the next decade. Just more than
    10 percent oppose these provisions.  
  • More than 70 percent also support the act limiting annual out-of-pocket costs for Medicare recipients to $2,000, while 15 percent oppose it.  

The Hill’s Jared Gans has the breakdown here.

Good to Know

Renewable energy will comprise nearly a quarter of electricity generated in the U.S. this year, according to projections from the U.S. Energy Information Administration (EIA).  

The number represents an increase from 2020 and 2021, both of which saw about 20 percent generation from renewables. The EIA further projected the proportion will increase to 24 percent renewables in 2023.  

Here’s what else we have our eye on: 

  • The Department of Energy announced on Wednesday that it is investing
    $45 million in cyber technology that will protect the power grid sector from cyberattacks. 
  • AP: “Federal Reserve officials saw signs that the U.S. economy was weakening at their last meeting but still called inflation “unacceptably high’’ before raising their benchmark interest rate by a sizable three-quarters of a point in their drive to slow spiking prices.”

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow.

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