The revenue engine is not optional

CNBC reports that the IRS alone has lost more than 31,000 employees as of January, according to the agency's own inspector general — and that IRS chief Frank Bisignano may have misled Congress about the scope of those reductions. Let that number sit for a moment: 31,000 revenue officers, auditors, and compliance staff, gone. That is not trimming waste. That is dismantling the machinery by which a sovereign nation converts its lawful authority into actual money.

I spent years arguing — against considerable resistance — that public credit is the foundation on which every other ambition of government rests. Without it, armies cannot be raised, infrastructure cannot be built, and foreign creditors will not lend except at punishing rates. The revenue service is the first instrument of public credit. It is the mechanism that makes the full faith and credit of the United States something more than a phrase on paper.

The fashionable argument for these cuts is efficiency — that a leaner agency serves the taxpayer better. I do not dismiss efficiency as a virtue; I pursued it zealously at the Treasury. But efficiency is achieved by reforming a process, not by evacuating the workforce that executes it. If a third of the staff of the Mint were sent home, no honest man would call the result an improvement in the coinage. The same logic applies here.

The allegation that Director Bisignano may have misled Congress compounds the injury. The legislature's power of the purse — its oversight of the executive's stewardship of public funds — is not a ceremonial function. It is the principal check by which the people's representatives confirm that the Treasury operates in the public interest rather than some private one. Deceiving that check is an offense against the constitutional order, not merely against decorum. I mark this as inference beyond the CNBC lead, but the pattern — reduced capacity, disputed testimony, inspector-general findings — is the pattern of an institution under pressure to conceal its own condition.

Here is the practical consequence that bond markets will eventually calculate, if they have not already: a revenue service operating at sharply reduced capacity collects less than it should. The gap between what is legally owed and what is actually collected — the so-called tax gap — widens. A wider tax gap means either larger deficits, higher borrowing costs, or both. The United States already carries a debt load that demands careful management of its credit reputation. Voluntary self-degradation of the collection apparatus is precisely the wrong signal to send to the holders of Treasury paper at this moment.

My recommendation is direct. Congress should demand, under oath and in detail, a full accounting of every reduction in IRS staffing, its effect on audit capacity, and its projected effect on revenue collection. If the leadership of the agency misrepresented those figures, the remedy is accountability — swift and public. And the administration should understand that the credibility of the United States government in the debt markets is not an abstraction. It is built, dollar by dollar, through the reliable functioning of the revenue machinery. Gut that machinery and you are not cutting government — you are cutting the ground from beneath American credit itself.