As the government shutdown grinds on and the need to raise the federal debt limit looms ahead, the latest word emanating from behind closed doors in Washington is the emerging possibility of a “big” deal on the federal budget—one that includes new revenues and possible entitlement reforms. Any big must replace sequestration with a balanced approach that raises new revenues by closing corporate tax loopholes.
But first things first—Congress must reopen the Federal government and pass a debt limit increase without delay and without condition. Everyone wants to put together a fiscally responsible budget, but shutting down the government is just not the way to do it. Certainly refusing to raise the debt ceiling and defaulting on our national debt is not the way to do it either—doing so would almost certainly cause even greater economic challenges at home and around the world.
North Carolina and the nation are already reeling from the first round of sequestration cuts. Since 2011, almost three-quarters of debt reduction has come from spending cuts, and as a result, key domestic initiatives like K-12 education, food safety inspections, and research and development are now at the lowest levels as a share of the economy since the 1950s.
Rather than embrace additional spending cuts to these domestic initiatives, Congress should look at hidden corporate tax code spending as a source for raising new revenues. And fortunately, HR 1588—the Stop Tax Haven Abuse Act (S. 1533)—presents a great place to start, by closing a number loopholes that allow American-based corporations to avoid paying taxes on the incomes they stash in overseas accounts. See some examples here.