02/08/2013 09:32 am ET Updated Apr 10, 2013

The Revenue Discussion Is Not Over

Every family in America knows that our country has been through hard times in recent years. Now, finally, there's light at the end of the tunnel: our economy has added private sector jobs for 35 consecutive months; the national unemployment rate is down to 7.9 percent; the stock market is surging, with the Dow Jones Industrial Average recently topping 14,000 for the first time since 2007; and the housing market is recovering, with home prices up 8.3 percent in the past year.

We still have more work to do, especially in high unemployment states like Rhode Island, but we are clearly on the right track. Unfortunately, a potential Washington-made disaster is looming: the sequester.

The sequester is a series of harsh across-the-board federal spending cuts that will automatically kick in on March 1, unless we act to stop it. Economists have been very clear: going forward with this sequester would imperil our fragile economic recovery, and cost as many as one million American workers their jobs.

We should make every effort to prevent this needless, self-inflicted harm. Many Republicans have said they want the sequester, as part of their clamor for "austerity." In Europe, countries that responded to the economic downturn by slashing their budgets suffered shrinking economies and persistent double-digit unemployment rates. But the failure of austerity in practice does not deter our Republican colleagues.

We can reduce our deficit, and do it in a much more balanced way than sequestration, simply by fixing our tax code to get rid of needless giveaways.

I'm introducing two bills in the Senate to replace the sequester with a fair alternative that would help our economy rather than harm it. One bill would permanently repeal the nine-year sequester and the other would delay the sequester until the end of this fiscal year, giving us time to resolve the issue through the regular budget process.

Here are a few of the ideas I'm proposing:

  • Implementing the Buffett Rule, which would require multi-million-dollar earners to pay at least a 30 percent effective tax rate;
  • Ending a tax policy that rewards companies for sending jobs overseas;
  • Eliminating a tax giveaway for private jets;
  • Ending tax giveaways to Big Oil;
  • Implementing a modest 0.03% tax on financial transactions to discourage high-frequency trading; and
  • Limiting the value of tax deductions to 28 percent.

All told, closing these loopholes would generate over $1 trillion in new revenue over 10 years -- beyond the $960 billion we need to offset the sequester and bring our deficit under control.

Republicans argue that our revenue discussion should be over. They'll say that we already agreed to raise tax rates a little bit on the rich, so now we should only be cutting spending. But they ignore that America gives away through the tax code just as much money as it collects. Closing tax loopholes has to be part of the revenue equation. Moreover, through the Budget Control Act and other measures enacted in the last Congress, we have cut the deficit by $2.4 trillion, $1.7 trillion of that through spending cuts and related interest savings, and only $700 billion through new revenues. The vast majority of our deficit reduction has already come through cuts, and no revenue yet has come from tax loopholes.

It's just a matter of our priorities. Is keeping Big Oil happy with subsidies from the American people more important than addressing our deficit? Should a billionaire who makes a multi-million-dollar gift to a museum receive more tax bang for his charitable buck than a middle-class family who gives to their local church? And is protecting these special-interest tax giveaways more important than addressing the deficit?

These are the kind of questions my Republican colleagues need to answer as we continue our debate on how to best reduce our deficit.

So let me be clear, the revenue discussion is not over. I hope my legislation will serve as a starting point for our debate about how to reduce our deficit without derailing our economic recovery.