Debt Ceiling Shouldn't Be a Pawn in Deficit Debate
By Amit Jain
The federal debt ceiling has become a pawn in the debate over how to reduce the federal deficit. The Treasury Department has said Congress must vote to raise the debt ceiling by Aug. 2 so the government can continue to fulfill its obligations, but some lawmakers are using this deadline to push for draconian spending cuts to domestic programs that would do little to address the nation's long-term structural deficit.
Earlier this week, the debt ceiling and the deficit were topics of discussion during a conference of the Committee for a Responsible Federal Budget. In an opening statement, Federal Reserve Chairman Ben Bernanke said the debt ceiling vote is "the wrong tool" for this debate. Bernanke is right. Using the debt ceiling as a bargaining chip would disproportionately harm low-income Americans.
At the conference, an ideologically diverse array of speakers agreed that the August deadline must be met. Chairman Bernanke said that even if the Treasury prioritized interest rate payments to avoid a default, it would have to withhold outlays for support programs such as Social Security, Medicare, and Medicaid. Millions of Americans count on these supports to make ends meet and keep their families in good health.
Former Republican Sen. George Voinovich joined many in both parties to speak forcefully in support of raising the debt ceiling. He said his conscience would not let him oppose such a critically important action.
Holding the debt ceiling vote hostage to budget cuts would likely result in drastic cuts to domestic, non-discretionary programs, as proposed in the FY 2012 House budget resolution. The budget, which passed in the House in April, proposed deep cuts to poverty-alleviating, opportunity-promoting programs such as Pell grants, workforce development and early education. It also proposed converting Medicaid and the Supplemental Nutrition Assistance Program (SNAP) into block grants, which would severely erode funding for these programs. These measures would be detrimental even in good times, but in this economic climate, they will also deeply harm the low-income families who have been most severely affected by the economic downturn.
As former Service Employees International Union President Andy Stern said: the nation cannot let any solution to its debt crisis exacerbate the "life crisis" that disadvantaged Americans continue to experience.
The bipartisan National Commission on Fiscal Responsibility and Reform (deficit reduction commission) in late December recommended that to reduce the nation's deficit, everything must be on the table, including revenue. The fundamental problem with holding the nation's debt ceiling hostage to budget cuts is that it doesn't consider the other very important side of the equation.
The nation must carefully weigh how it spends it resources, but it also must examine what it takes in. National Economic Council Director Gene Sperling said painful funding cuts for Medicare and other programs were a direct result of House leadership's refusal to raise taxes. Sperling pushed for a budget solution that embodies the American ethos of shared sacrifice, not one that weakens investments in its future and slashes supports for the low-income families who need them most.
It is clear that the nation must reduce its deficit, but if the vote to raise the debt ceiling is held hostage and revenue raisers remain off the table, the Treasury will be forced to withhold funding for programs that build our roads, ensure the safety of our food supply, provide educational opportunities for young children, and prevent family hardship during tough economic times. Our elected officials should find the courage to do what is right for America by quickly voting to raise the debt ceiling. Then, they should begin having a realistic debate about the nation's budget. And in this debate, they should keep in mind the principles outlined by deficit reduction commission co-chairs Erskine Bowles and Alan Simpson: protect programs for low-income families and individuals and make sure that deficit reduction is achieved in a way that does not increase poverty.