Treasury Secretary Yellen says IRS needs to be ‘completely revamped’ and rules out $1 trillion coin for debt limit

Treasury Secretary Janet Yellen said Sunday that the IRS must be “completely rebuilt,” marking the beginning of a long and arduous fight against Republican efforts to dismantle the tax agency.

He comes the same day that he told the Wall Street Journal that minting a $1 trillion coin to prevent the US from going into financial default would probably be out of the question.

House Republicans oppose raising the debt limit without offsetting the increase with spending cuts elsewhere, a point Senate and White House Democrats have made clear they will not negotiate.

When asked by Reuters about the impending debate with Congress, Yellen simply put her hand to her forehead and sighed.

Among the first acts of the Republican Party in the House majority this year has been to vote on a bill to repeal the additional funds given to the IRS by the Inflation Reduction Act.

It will likely go nowhere in the Senate, but the token legislation is a clear marker that negotiating with the right over internal revenue improvements will be an uphill battle.

Yellen said on her way to Zambia that she was delighted that the last Congress had approved $80 billion in new funding to help the agency reduce a huge backlog of tax returns and better search for $600 billion in unpaid tax bills.

She said she chose to stay on as Treasury secretary in large part to oversee the implementation of legislation like the Cut Inflation Act, which included IRS funding and passed along party lines last year.

In October, Yellen denied unconfirmed reports that she would resign and be replaced by President Joe Biden after the midterm elections.

The Treasury official lobbied hard for additional funding to help the IRS deal with what she called massive problems, including a “huge backlog” of work on tax returns and a lack of staff to conduct complicated audits of taxpayers. with higher income.

“I’m excited about the legislation that’s passed and I want to make sure it makes the difference it should, and that includes the IRS,” she said.

“That agency needs to be completely revamped, and it’s a big task.”

He dismissed the idea of ​​minting a trillion dollar coin to help the US pay off its debts as a “trick.”

But he will have to juggle the agency review while navigating Treasury through the “extraordinary measures” needed to move the US economy forward, as he announced to House Speaker Kevin McCarthy last week.

Yellen wrote a letter to McCarthy on January 19 warning that the US was very close to its debt limit and urgent action was needed to avoid the risk of a massive default that could send the world economy into a tailspin.

“The length of time extraordinary measures may last is subject to considerable uncertainty, including the challenges of forecasting US government payments and receipts months into the future,” he wrote.

“I respectfully urge Congress to act expeditiously to protect the full faith and credit of the United States.”

Speaking to the Journal about one option, minting a $1 trillion coin that would then be deposited with the Federal Reserve and used to pay off the country’s debts, Yellen surmised that such a move would be out of the question for the monetary body.

“It should by no means be taken for granted that the Fed would do it, and I think especially with something that is a gimmick,” Yellen said.