Not to be dramatic, but hearing the news that the United States could be on the brink of a financial disaster in a few weeks, was not exactly how we’d hoped to kick off the new month. On Monday, US Treasury Secretary Janet Yellen announced that the United States could run out of money to meet our obligations as soon as June 1st. That means for the first time in our country’s history, we could end up defaulting on our debt, which is a big problem if you enjoy not being in the midst of another Great Recession.
Despite knowing for months that the United States had officially hit the debt ceiling, which is $31.4 trillion, we still don’t have a deal to raise the limit. For folks wondering why that’s such a problem; we’ll break it down as simply as possible. The debt limit is the amount of money the federal government can borrow to meet their existing funding obligations, including Medicare, Social Security, and loan payments. Congress regularly votes to increase this limit so we can borrow more and can keep paying our bills, including our national debt.
So far, the United States has never defaulted on our loans, but that will happen if we don’t raise the debt limit. It’s not so different from when a regular person defaults on their loans, only on a much bigger and more complex scale. Our credit rating would fall, potentially triggering a deep recession. And because the global economy is so intimately tied to our economy, if we default, we risk not only plunging ourselves into a severe recession; but we could also tank the global economy.
Why Should Black People Care What Happens With the Debt Limit?
Unfortunately, this isn’t the kind of crisis Black Americans can afford to ignore. A deep recession would, in all likelihood, be devastating for Black Americans. Studies have shown that Black Americans are generally among the first groups to be laid off when unemployment is high and the slowest demographic to recover after a recession.
Black Americans would also be disproportionately harmed if the government can no longer fully fund social welfare programs, including Social Security, Medicare, and Medicaid. Just take Social Security, for example. A 2017 study found that 35 percent of elderly married Black couples and 58 percent of unmarried Black older adults relied on Social Security for 90 percent or more of their income.
What Is Going on In Congress With The Debt Limit?
At this point, you’re probably wondering why Congress hasn’t already raised the debt ceiling. The answer is simple, politics.
House Republicans recently passed a bill to raise the debt limit. However, they included a bunch of spending cuts and new work requirements for people receiving government benefits, including food programs such as SNAP. The bill is unlikely to go anywhere since President Joe Biden is currently pushing for Congress to raise the limit without extracting any concessions.
However, there is still hope that we can avoid a crisis point in the next few weeks. On Tuesday, House Democrats led by Representative Hakeem Jeffries (D-NY) enacted a plan to try to force Republicans to raise the debt limit. Democrats plan to use an archaic procedural process known as a “discharge petition,” which would allow them to get around Republican opposition to raising the debt limit without spending cuts.
“House Democrats are working to make sure we have all options at our disposal to avoid a default,” wrote Representative Jeffries in a letter he sent to colleagues on Tuesday, obtained by the New York Times. “The filing of a debt ceiling measure to be brought up on the discharge calendar preserves an important option. It is now time for MAGA Republicans to act in a bipartisan manner to pay America’s bills without extreme conditions.”
The measure is undeniably a long shot, but with the threat of economic disaster mere weeks away, a Hail Mary pass is better than nothing.