Here’s what the media should be telling you about the debt ceiling crisis. The crisis is manufactured. Raising the debt ceiling doesn’t add to the debt or the deficit. Budgets do.
The current debt ceiling needs to be raised to pay for debt incurred during budgets voted on by many of these same Republicans.
Republicans are creating a debt ceiling crisis because their proposed budget is unpopular, and they want to make the President look like he’s dogmatically committed to deficit spending, similar to the way they’re dogmatically committed to tax cuts for rich people.
The premise behind all this is that the budget deficit must be reduced by any means necessary. However, there is no reason to believe that our debt presents a crisis that is urgent enough to justify the dangers of defaulting on that debt.
That said, any solution to the crisis these Republicans have manufactured involves some combination of these options.
Option 1: Default on the Debt
This is what Republicans claim they’re willing to do unless they’re granted their budget demands. Experts predict that this would cause a global economic crisis. I keep saying this, but, Republican politicians do not care about people.
- Borrowing costs would explode, which would further increase the deficit.
- The U.S. GDP would experience a 4% decline.
- Approximately 6 million jobs would be lost, resulting in…
- An unemployment rate of more than 7% and household wealth would decrease by $12 trillion.
With this option, Republicans are committing extortion: give them what they want, or they’ll ruin the economy.
Option 2: Pass The Republican Budget
Experts predict this would reduce the deficit by:
- $4.8 trillion over the next ten years.
- 2.2 million people would lose health insurance.
- The average household income would decline.
- 3 million people would lose food assistance or see that assistance reduced.
- 1.5 million families would lose housing assistance or see that assistance reduced.
- 200,000 children would lose access to pre-K programs.
- Pell Grants would be reduced by $1,000 per recipient.
- $1.3 trillion in education resources would disappear, affecting 25 million poor students and 7.5 million students with disabilities.
- 2.6 million jobs would be lost
- GDP would be 2.7% lower.
Both of the options above result in a recession, unemployment, and suffering. Even for the people who vote for Republicans as well as members of Republican politicians’ families.
Option 3: Increase Taxes on the Top 1%
- Increase Taxes on the Top 1% of income earners by an effective tax rate of 37%.
- This affects about 1.5 million people, who earn an average of 2.7 million in adjusted annual income.
- This would reduce the deficit by $4.5 trillion over the same time period.
Or, we can pass a clean debt ceiling increase, and Republicans can negotiate a budget when it’s time to pass a budget, like responsible legislators.
In summary, Republicans can initiate an economic crisis and cause the most economically vulnerable people in America to suffer even more than they already are. In addition to the rest of us.
They can ask the richest people in America to pay more taxes and remain the richest people in America. Or they could take their jobs and responsibilities seriously and negotiate a budget when it’s time to pass a budget.
Republicans are pretending the last two options don’t exist. And the press is letting them get away with it. You shouldn’t.
Sources: Council on Foreign Relations and Moody’s Analytics