Biden condemns ‘fiscally demented’ congressional Republicans for IRS and tax agenda

President Joe Biden has pledged to strike down a “fiscally demented” tax agenda from House Republicans, which would strip funding to and ultimately abolish the federal tax agency, explode the deficit by tens of billions and shift the nation’s tax burdens on lower-income Americans.

In remarks spanning civil rights and wealth inequality on Martin Luther King Jr Day, the president condemned the new Republican House majority and its recently passed legislation to revoke new Internal Revenue Service funding aimed at boosting compliance against tax cheats.

The president pledged to veto such legislation, which is guaranteed to fail in a Democratic-controlled Senate.

A bill sponsored by Republican US Rep Adrian Smith would revoke more than $70m in new IRS spending approved last year through the Inflation Reduction Act, a move that would boost hiring for new agents, which GOP officials including new House Speaker Kevin McCarthy have repeatedly, falsely claimed would create an “army” of 87,000 agents to antagonise Americans.

The president said he was “disappointed” that the bill – among several “messaging” bills doomed to fail in the Senate – was among Republicans’ first priorities with their new majority, choosing instead to support “wealthy people and big corporations cheat on their taxes at the expense of ordinary middle-class taxpayers,” he said.

“All these new IRS agents we have is because they fired a lot of them, a lot are retiring, and guess what? Who needs serious agents to know what they’re doing or not doing? The billionaires, the multi-multimillionaires,” he said, noting that the nonpartisan Congressional Budget Office projected the bill would add $114bn to the deficit.

“They campaigned on inflation,” he said. “They didn’t say, if elected, their plan was to make inflation worse.”

Another bill sponsored by US Rep Buddy Carter would dissolve the IRS entirely and eliminate most if not all taxes and replace them with a consumption tax that economists warn would “turbocharge” inequality.

“What in God’s name is that all about, other than what is obvious?” Mr Biden said. “They want working class folks to be paying another 10, 20 per cent of their taxes depending on where they live and how they spend their money. And they’re going to reduce taxes for the super wealthy.

Mr Biden also revived his opposition to the so-called “trickle-down economics” theory that has dominated Republican policy for decades.

“I think the economy – the way it should grow in America – is from the bottom up and the middle out,” he said. “That way poor folks have a shot, middle-class people do well and the wealthy still do very well. They still do very well. But they start to pay their fair share.”

The president touted his administration’s efforts to reduce the deficit “hundreds of billions” over the next decade. reduced over the next decade while pointing to Republican plans that would devastate any gains made.

“But so what? These guys are fiscally demented, I think. They don’t quite get it,” he said.

Last week, Treasury Secretary Janet Yellen warned congressional leaders that the US government’s outstanding debt obligations will soon reach a statutory ceiling of $3.4 trillion. The White House has warned House Republicans against using the urgent need to raise the debt limit as leverage in attempt to extract concessions from the administration.