As a political watch reported earlier todayU.S. Senate Republicans – including Thom Tillis and Richard Burr of North Carolina – on Monday night blocked a Democrats’ attempt to start debate on a sweeping bill that would avert multiple impending budget crises for the federal government.
The measure in question would have allowed the government to operate beyond Thursday’s fiscal year-end, increase the federal government’s borrowing limit (also known as the “debt ceiling”) and approve billions of dollars. ‘aid to regions hit by extreme weather conditions.
The debt ceiling debate, in particular, is a matter of great urgency because, without the increase, the nation could face a cascading series of economic and humanitarian crises.
To help readers grasp the substance and importance of this debate, Policy Watch publishes highlights from a pair of topical essays written by senior national policy analysts.
In “Not suspending or increasing the debt ceiling would have far-reaching effects” Principal Researcher of the Center on Budgetary and Policy Priorities Paul N. Van de Water explores many of the potentially devastating impacts that will result if GOP senators continue to block legislation to increase the borrowing limit.
In “Abolish the debt ceiling before it returns to austerity”, Research Director of the Institute for Economic Policy Josh bivens argues convincingly that the borrowing limit is useless and should be repealed.
Not suspending or increasing the debt ceiling would have far-reaching effects
By Paul N. Van de Water
If the nation first breached its legal obligations – which will happen if lawmakers do not increase or suspend the debt ceiling in the coming days – it would have devastating consequences not only for the financial markets and economy, but also for the tens of millions of ordinary Americans who rely on federal services and benefits, for states that rely on federal funding for a range of services, and for businesses and non-profit organizations that work for or receive federal government funding.
If the nation first breached its legal obligations – which will happen if lawmakers do not increase or suspend the debt ceiling in the coming days – it would have devastating consequences not only for financial markets and the economy, but also for the tens of millions of ordinary Americans who rely on federal services and benefits, for states that rely on federal funding for a range of services, and for businesses and non-profit organizations that work for or receive federal government fundingâ¦.
â¦Here are some examples:
- 65 million Social Security beneficiaries could see their benefits delayed, at least for short periods. Although Social Security has its own trust fund, the inability of the treasury to prioritize payments could prevent benefits from being paid on time.
- 6 million veterans and veterans survivors receiving compensation or pensions and 22 million low-income households receiving SNAP benefits could have their benefits suspended for weeks or months even if they have to pay their bills and put food on the table.
- 1.4 million military personnel and 3 million federal civilian employees could see their pay delayed – for weeks and months, not just days.
- Funding for Medicaid, the largest source of federal aid to states, and public health would be threatened with cuts, despite the critical need for health care during the pandemic. As of April, 82 million people were enrolled in Medicaid and the children’s health insurance program.
- Head Start agencies could see their funding delayed for long periods of time, leaving them with no money to pay their staff and possibly forcing them to close.
- Road contractors might not get paid quickly, preventing them from purchasing building materials, paying their workers, and completing their projects.
- Companies that clean federal offices, provide federal agencies with computers, paper, and other supplies, or sell equipment to the military could all see their payments for the services, supplies, and equipment they have. supplied blocked for long periods, which complicates the task of the latter. companies to respect the payroll and to pay their suppliers.
- State funding for K-12 education and care could be delayed for long periods. This could mean funding gaps in school districts across the country, and it could mean that child care assistance programs are underfunded, leaving child care providers – often small businesses and organizations in the dark. non-profit – unable to pay rent or their staff.
- Disaster assistance in response to recent hurricanes, floods, fires and other natural disasters could be delayed, leaving communities without desperately needed assistance.
- Cuts to agricultural commodity programs and crop insurance would weaken the agricultural safety net and expose farmers to the risks of low prices and poor harvests.
- Doctors could see payments for their care for Medicare patients delayed for weeks or months, preventing them from paying their staff and staying in business.
- Housing assistance payments could be seriously delayed, with payments missed over the next year, even as millions of families continue to report that they are not caught up with their rent or mortgage payments. Now that the federal moratorium on evictions has expired, the only consequences of evictions could be serious.
These are just a few examples of what would happen if the federal government failed. If the government’s inability to borrow was brief, some programs and beneficiaries could fare relatively unscathed, depending on payment schedules. However, if the debt ceiling crisis persisted, every federal program and activity could face substantial cuts or delays in spending.
Click here to read the entire essay.
Aremove the debt ceiling before restarting austerity
By Josh Bivens
The debt limit:
- Does not measure any consistent economic value. The measure of the debt it targets is not corrected for inflation, would perversely give the impression that the debt situation worse if there was a social security reform that ended the long-term actuarial imbalance of this program and ignores billions of dollars in assets owned by the federal government.
- Not related to an economic stressor the country faces – over the past 25 years, as nominal federal debt Pink from $ 5,000 billion to $ 22.7 trillion, debt service payments (required interest payments on debt) Shrunk almost half, from 3.0% of GDP to 1.8%.
- Can cause real damage if not lifted in the next few weeks. It would only take a few months of missing federal payments due to the debt ceiling to mechanically send the economy into recession, and that’s without assessing the damage this would cause from fallout in financial markets.
- Has been used time and time again to enforce misguided austerity policies. The 2011 Budget Control Act (BCA) arose directly from a GOP congress threatening not to raise the debt ceiling in the absence of spending cuts. The BCA provided an anti-stimulus approximately twice as much as the stimulus provided by the American Recovery and Reinvestment Act (ARRA – commonly known as “The Recovery Act”) and is largely responsible for the slowness of recovery after the recovery. Great Recession.
In view of all this, the debt ceiling should be abolished or neutralized in any politically possible way. It serves no good economic and a lot of evil. Below, we develop these pointsâ¦.
Click here to explore the remainder of Bivens’ essay.