There are quite a few Democratic senators that are now talking about the idea of maybe we don’t need to raise all of these taxes, and you just made a case, for instance, on infrastructure that, you know, these are investments and that they’re worthy of deficit spending. This bill comes back to the president without this pay for presidents still going to sign it.
Well, I’m not going to speak for what the president will do in the negotiation, but he has made clear that he believes that permanent increases in spending should be paid for. And I agree. I think we’re in a good fiscal position. Interest rates are historically low. They’ve been that way for a long time and it’s likely they’ll stay that way into the future. But we do need fiscal space to be able to address emergencies like the one that we’ve been in with respect to the pandemic. We don’t want to use up all of that fiscal space. And over the long run, deficits need to be contained to keep our federal finances on a sustainable basis.
So I believe that we should pay for these historic investments. There will be a big return. I expect productivity to rise. There will be great returns from investing in research and development and enabling families to participate with paid leave and child care support in the workforce. So I think it’s true that a stronger economy will generate more tax revenues, but I think the safest thing is to pay for them. And we’re doing it in a way that’s fair.
I should also mention that an important way of paying for this is increasing tax compliance. It’s estimated that underpayment of taxes that really do is costing us the federal government about seven trillion dollars over a decade. And there’s an important proposal here to increase compliance to funding the IRS so that and this is a matter of fairness to increase and collect the tax revenue that’s due under our tax code.