CBO: Israel Supplemental Costs $27 billion

The House of Representatives is set to vote on the Israel Security Supplemental Appropriations Act as early as Thursday. This morning, the Congressional Budget Office (CBO) released a score of the bill, finding it would add $26.7 billion to deficits over a decade.

Under the legislation, the House would “offset” the $14.3 billion supplemental by rescinding $14.3 billion of funding from the Internal Revenue Service (IRS). However, the supposed offset would actually worsen the deficit more than simply enacting the supplemental on its own because it would reduce the IRS’s capacity to collect revenue.

Specifically, CBO estimates the $14.3 billion of rescissions would reduce revenue collection by $26.8 billion over the next decade, resulting in a $12.5 billion net cost. In combination with the supplemental spending itself, this would mean a $26.7 billion deficit increase over the next decade – including $21.5 billion over the next five years.

Summary of CBO's Score

Policy Cost / Savings (-)
Israel Aid Supplemental - Defense $10.5 billion
Israel Aid Supplemental - State, Foreign Operations $3.7 billion
Rescission of IRS Funding -$14.3 billion
Loss of Revenues due to Rescission $26.8 billion
Total $26.7 billion

Sources: Congressional Budget Office and CRFB analysis. Note: Numbers reflect outlays and revenues and may not sum due to rounding.

While we welcome the House’s efforts to offset the supplemental, rescinding IRS funding would actually increase deficits by worsening the tax gap. We encourage Congress to instead find real offsets for the legislation.