Former Treasury Secretary Larry Summers believes that the current budget deficit poses a greater challenge for the economy than it has before in U.S. history.
Former Treasury Secretary Larry Summers believes that the current federal budget deficit poses a greater challenge for the economy than it has before in U.S. history.
Summers discussed the issue of IRS enforcement of tax laws, an issue that he said was of increasing importance when the fiscal deficit remains so high.The budget deficit is large not only in absolute terms, but also relative to the size of the U.S. economy. The 2023 shortfall came in at 5.3% of GDP, well above the average 3.8% seen over the past 40 years, according to data from the Office of Management and Budget.
“Seems to me that before we get to painful spending cuts, before we get to raise taxes on anybody under the law, we ought to be collecting the taxes that are owed,” Summers said. “I see a kind of overwhelming evidence that by strengthening the work the IRS does, we can raise more tax revenue.” The Inflation Reduction Act of 2022 provided $80 billion in new IRS funding over ten years, which the Congressional Budget Office estimated would increase revenues by roughly $200 billion over that same time.
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