Debt Ceiling Agreement Avoids Catastrophe but Rescinds Important Funding to Support Small Business and Enforce Tax Fairness

"While it is essential to support President Biden’s recommended solution to avoid the disastrous consequences of a default on the United States’ sovereign debt, it is outrageous that those who would act recklessly have threatened the stability of the American economy to extract concessions they could not obtain in the regular legislative process. 

Under the debt-ceiling agreement that is now pending before Congress, $30 billion of unobligated COVID-19 relief resources would be cut, including funding for several programs that small businesses rely upon. This would entail reduced support for the Economic Injury Disaster Loan (EIDL) program and the State Small Business Credit Initiative (SSBCI), a proven program that generates ten times the budget cost in private capital and is targeted to small businesses in under-resourced communities, particularly entrepreneurs of color and women. As many small businesses are still working to recover from the pandemic, reducing support for these programs hampers long-term recovery efforts.

Additionally, the current debt-ceiling agreement decreases money for the Internal Revenue Service (IRS) by $21.4 billion. Through provisions included in the Inflation Reduction Act, funding was appropriated for IRS enforcement to help ensure that big corporations and the wealthiest taxpayers pay their fair share, something that small business owners support. Clawing back funding will hamper the ability of the IRS to maximize revenue and sustain a more level playing field. It will also limit the ability of the IRS to assist small business owners seeking important tax information. 

Instead of cutting spending for critical small business and other domestic programs, the budget deficit should have been addressed by implementing the president's tax proposals to restore pre-2017 tax rates on the top tax brackets into which fewer than 4% of small business owners fall. This is a policy supported by a majority of America’s entrepreneurs. Creating a system where wealthier businesses pay their fair share will promote healthy competition that stimulates the national economy. 

Congress has no choice but to approve the debt-ceiling deal. However, this economic brinkmanship cannot continue. Small businesses have been regaining confidence coming out of the pandemic, but have suffered through the recent months of uncertainty, affecting their decisions to seek capital, invest in their business and hire employees. Once the immediate problem is solved, Congress and the president must end the threat of a default on our credit obligations once and for all so that we don’t have to endure this destructive process again."

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