Too much space for DOGE?

Politico

03-03-2025

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TOO MUCH, WE SAY: Leading Democratic lawmakers say that their fears have been confirmed — that the agreement governing the access Elon Musk's team has to sensitive taxpayer data is too open-ended.
The Treasury Department gave that memo to lawmakers last week, after Trump administration officials stressed that Gavin Kliger, the Department of Government Efficiency staffer currently detailed to the IRS, would only be able to see anonymized tax data — similar to what researchers can get for academic projects.
But Sens. Ron Wyden of Oregon and Elizabeth Warren of Massachusetts — the top Democrats on the Finance and Banking panels, respectively — said taxpayers had every reason to worry about the agreement, dubbing it 'essentially a pinky-swear between a few Musk personnel.'
'The fact remains that there is no reason for any of them to come anywhere near taxpayer data,' Wyden and Warren added, in a statement.
'The IRS has a higher bar for data security specifically to prevent the kind of reckless targeting, leaks and abuse we've seen ever since Musk and his henchmen began ransacking federal agencies.'
One of the big issues that Democrats have with the five-page memo is with the passage outlining that Kliger won't be able to see personal data. The agreement says 'it is not the intention' for that to happen, which Democrats believe gives way too much leeway to DOGE.
It also doesn't give a specific purpose for why Musk's team needs to get into IRS systems, nor was the memo signed by anyone at the IRS. On top of that, the memo —which is for 120 days, but can also be extended — is open to be amended.
Outside taxpayer advocates expressed similar concerns about DOGE's access at the tax collector, even before the Trump administration gave the memo to Congress.
But key GOP lawmakers say they have no reason not to trust the Trump administration, at least for the moment. Senate Finance Chair Mike Crapo (R-Idaho), for instance, said last week that Treasury Secretary Scott Bessent 'has been very clear' about DOGE's goal of modernizing technology systems and weeding out fraud, and what Musk's team will be allowed to do at the IRS.
The details of the memo also are spilling out as DOGE reportedly is pressing the IRS to use taxpayer data to investigate potentially improper benefit payments. Meanwhile, the Department of Homeland Security wants similar help to track down the addresses of immigrants not authorized to be in the U.S.
'Our government systems are outdated, and individuals with proper clearances are modernizing them in accordance with the law,' Harrison Fields, a White House spokesperson, said about the broader DOGE efforts.
ENOUGH GOING ON for everyone? More on everything in a bit, but first thanks for coming back for Weekly Tax. And, really, what better day to think about film tax credits.
Certainly seems to be a favorite of a current president: Today marks 102 years since the first edition of Time magazine — which featured former Speaker Joseph Cannon, on his way out of the House, on the cover.
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WHY NOT GO FOR IT? People like Steve Bannon believe that the current, more populist conservative movement is ready to hike taxes on the rich.
One problem there: GOP policymakers don't seem to agree. In fact, there is vanishingly little interest among Republicans in returning the top rate to 39.6 percent from its current 37 percent as part of a broader tax deal this year, as Pro Tax's Brian Faler reports this morning.
Some Republicans will acknowledge the potential political appeal of raising the rate on less than 2 million of the country's most prosperous households, particularly with the GOP now contemplating cuts to programs like Medicaid to help pay for extending the temporary parts of the Trump tax cuts and potentially other tax relief measures.
Such a move wouldn't raise a trivial amount, either — around $360 billion over a decade.
Not to mention, it wouldn't even constitute a net tax increase for lots of rich people, if Republicans extended the other temporary parts of the Tax Cuts and Jobs Act. (The top 1 percent would on average get a tax cut of around $45,000 in that scenario, according to the Urban-Brookings Tax Policy Center, a drop of more than 40 percent from what they'd get under a full extension.)
So why aren't Republicans interested? Many GOP officials owned businesses themselves, and advocates for pass-through entities — for whom that top rate is very important — are a key constituency for the party.
There's also a sense among Republican lawmakers that it's dangerous to open the door to a higher top rate specifically, because Democrats would never want to close it.
What's a Speaker to do? Speaker Mike Johnson currently has a cushion of all of one vote in the House, which forced him to liberally throw out some promises to his members in order to get a budget resolution through the chamber last week.
Next question: How can he follow through on those assurances when some of them are in conflict, as our Meredith Lee Hill asks.
For instance, Johnson started publicly praising the idea last week of a current policy baseline, the approach that finds there is no cost to keeping the expiring parts of the Trump tax cuts.
That's the easiest path to passing permanent tax cuts this year, which President Donald Trump and senior Senate Republicans have said is a top priority. But going down that path might spark further demands for spending cuts from hardline House Republicans, at a time when their more moderate colleagues are queasy about what might already be required under their budget resolution.
More on the drive for tax cuts: Let's be clear — discussion over the current policy baseline is absolutely going mainstream.
At the same time, deficit-conscious budget analysts are increasingly pushing back on arguments in support of a current policy baseline, including that it's a more realistic appraisal of what extending the tax cuts would mean for regular Americans. (In other words, taxpayers wouldn't see any huge changes in their tax bill next year, so it shouldn't score as massive tax cut.)
No matter the baseline, according to a new post from the Bipartisan Policy Center, 'extending the tax cuts without paying for them will require trillions of dollars in additional borrowing over the next decade and beyond.'
The traditional current law baseline finds that preventing the TCJA provisions from lapsing costs around $4 trillion over a decade. 'If current policy is used, trillions of dollars in tax cuts for 2035 and beyond could be obligated without any way to pay for them, putting our nation's finances further at risk,' wrote BPC's Shai Akabas, Rachel Snyderman and Andrew Lautz.
Fly-in season: More than 6,000 advocates for credit unions are expected in Washington this week to lobby to keep the sector's current tax exemption.
They're coming to town as part of a conference hosted by America's Credit Unions, which has also launched a 'Don't Tax My Credit Union' campaign.
The banking industry has long pushed for ending the current tax exemption enjoyed by credit unions, arguing it gives a similar sector an unfair advantage. Credit unions have been able to keep the exemption on the books in previous tax fights, but they also might have new reason for concern this time around.
Ken Kies, the veteran GOP tax lobbyist and Trump's pick to be Treasury's assistant secretary for tax policy, has argued for years now that the credit union exemption should be scrapped. (One of Kies' clients was the American Banking Association.)
Around the World
Reuters: 'Canada to Extend Mineral Exploration Tax Credit for Two More Years, Minister Says.'
Bloomberg: 'Polish Opposition Candidate Floats Tax Cuts in Presidential Race.'
Also Reuters: 'Australia government pledges temporary beer tax freeze as election looms.'
Around the Nation
NJ Spotlight: 'The $1 billion in tax hikes that Murphy wants.'
Maryland Matters: 'Tax-free shopping week dropped, property and snack taxes added to menu of budget fix options.'
Indiana Capital Chronicle: 'New analysis shows some counties' homeowners burdened with disproportionate share of property tax.'
Also Worth Your Time
From the Sunday shows: 'Johnson floats stopgap funding bill, says GOP should codify DOGE cuts later.'
More on DOGE: 'What 130-day cap? Musk is 'here to stay' in the Trump admin, adviser says.'
Reuters: 'US Senate plan to make Trump tax cuts permanent raises 'debt spiral' worry.'
Did you know?
The Cannon House Office Building, which was finished in 1908, is the oldest office building in the congressional complex.