CBO: Significant risk that the federal government will run out of cash and borrowing authority by June 15. In its May 12 report, the Congressional Budget Office writes that inaction on the debt limit “would ultimately lead to delayed payments for some government activities, a default on the government’s debt obligations, or both.” Default “could result in distress in credit markets, disruptions in economic activity, and rapid increases in borrowing rates for the Treasury,” CBO said.
Indeed, defaulting on the national debt could be catastrophic. Or worse. TPC’s Len Burman warns that “risking a default on the national debt… could thrust the world economy into a recession or depression.” Worse yet, this exercise could also become routine in the future if lawmakers see holding the debt ceiling hostage as a way to trigger other reforms, Burman writes.
On Capitol Hill this week… The Senate Budget Committee will hold a hearing Wednesday to examine how tax cuts for the wealthy and corporations relate to the national debt. The Senate Finance Committee will hold multiple hearings. Tuesday’s full panel will examine how cuts to supplemental IRS funding could impact federal law enforcement and the federal deficit; the Subcommittee on International Trade, Customs, and Global Competitiveness will explore issues surrounding economic cooperation; the Subcommittee on Health Care will hold a hearing Wednesday on improving health care access in rural communities; and Thursday the full panel will explore tax incentives in the Inflation Reduction Act affecting energy communities. The House Ways & Means Committee will hold a hearing on health care price transparency on Tuesday, and its Health Subcommittee will hold a hearing on health care affordability on Wednesday.
And tomorrow at TPC: “Raising Revenue from Corporations.” TPC and the University of North Carolina Tax Center host the virtual event that starts at 11:00 am. Two expert panels will assess the effects of proposals to use corporate financial income as a tax base and to impose an additional tax on corporate share repurchases. Keynote speaker Itai Grinberg, former deputy assistant secretary for multilateral negotiations at the US Treasury Department, will discuss the new global tax agreement in the works and how it could reshape multinational corporation taxation. Learn more and register here.
A year-long tax freeze in Portland, Oregon? Portland city bureaus would like to raise taxes and fees in the upcoming annual budget. But Mayor Ted Wheeler plans to seek a one-year tax freeze, which could require budget cuts or reductions across municipal services next year. “The bottom line for me is that Portlanders are overburdened by increased taxes, utility rates, and fees,” he said. “I’m asking government leaders at all levels to work together to protect those who are impacted by these increases and safeguard our economic future.”
For the latest tax news, subscribe to the Tax Policy Center’s Daily Deduction. Sign up here to have it delivered to your inbox weekdays at 8:00 am (Mondays only when Congress is in recess). We welcome tips on new research or other news. Email Renu Zaretsky at [email protected].