Skip to content
Search

Latest Stories

Follow Us:
Top Stories

How the U.S. got two financial crises for the price of one

Opinion

President Biden speaking to reporters

President Biden spoke to reporters Monday about the need to raise the debt ceiling.

Chip Somodevilla/Getty Images
Wilson is an associate professor of political science at the University of Indianapolis and a public voices fellow at The OpEd Project.

A major crisis may have been averted, but the short-term gain will lead to a much greater long-term cost.

Congress recently narrowly avoided another government shutdown after contentious back-and-forth between Democrats and Republicans and first failing to pass a federal funding bill. The potential shutdown would have affected key government services such as the certain health care programs, food stamps and national parks.

Preventing the shutdown with mere hours to go may seem like a political victory but, to be sure, no one is winning.

Yes, vital services have been given the lifeline to continue but at a high cost. The measures assure they will have enough funding to sustain through Dec. 3rd, at which point another spending measure must be secured or a government shutdown will occur.

The major issues and conflicts that led to the partisan divide in the first place are far from resolved. Instead of meeting the deadline with resolution and newly recommitted compromise, policymakers hastily made short-term deals. They valued speed over quality and disregarded compromise.

No one needs to be reminded that our nation is facing one of the worst public health crises of our time with Covid-19 reaching the recent milestone of 700,000 deaths. Nor has anyone likely forgotten the need for vital government services, many of which would have been impacted by a shutdown. While addressing these issues fiscally may have been avoided for now, the longer impact still remains, both in terms of the financial and political repercussions.

Treasury Secretary Janet Yellen recently warned of the implications that failing to increase the debt ceiling could have, citing the potential for "widespread economic catastrophe." Even by narrowly avoiding the government shutdown, the country is faced with potentially defaulting on its debt as it approaches the national debt limit.

The United States usually spends more than it takes in and that tradition requires outside loans to make up the difference. Defaulting would waver the confidence of creditors and could usher in a series of steep political consequences, from future financial security to diplomacy with current and former allies.

The quick fix to avoid shutting down the government is not likely to impress U.S. creditors or offer much promise in addressing the arguably greater financial crisis in the debt ceiling limitations.

Understanding how it got to this point is easy. Debt accrues when debits outweigh credits. Necessarily expanding the role of government, especially in the last 19 months of Covid has only added to the costs, estimated by the Congressional Budget Office to be more than $2.4 trillion.

Yet identifying who is responsible becomes a far greater challenge. Some Democrats argue that both parties proposed policies that have led to this point while many Republicans have repeatedly said they will not pass a measure that will support policies they don't back. These include some items in the more liberal social agenda negotiated within the Democratic Party.

Recent polling indicates Americans generally agree with Republicans and subscribe blame to Democrats — as the party has enjoyed unified power in both houses of Congress and the White House since the last election.

With the congressional midterm elections looming next year, it is a political hot potato that no single party or politician wants to hold. And after seeing how leaders struggled to address government shutdown, the debt ceiling proves to be a far greater political challenge.

To be sure, the government has shut down 10 times in the last four decades but the circumstances have never been more dire and simultaneously avoidable.

Covid cases and deaths are slowly starting to drop nationally but the pandemic and its ravaging effects are far from over. Though government at all levels has been involved in economic recovery and public health measures, the federal government has borne the bulk of that responsibility, primarily under the American Rescue Plan. That plan allocated $1 trillion in tax credits and programs, $350 billion to emergency management funding, and $10 billion in relief for homeowners.

The price tag is hefty; the loss of lives is far greater.

Without congressional compromise to fund government agencies and avoid defaulting on credits by extending the national debt ceiling, the nation will face a substantial financial catastrophe. This would be the greatest challenge to the administration since President Biden took office in January.

Biden has been relatively quiet on this issue, seemingly leaving it up to Congress to work out the fight while he still reels from the debacle in Afghanistan and continues to focus on vaccination efforts as a reductive approach to Covid.

One of the challenges for Democrats is assuaging more liberal interests with more moderate pursuits and appeasing everyone in the party through the process. Biden initially ran against dozens of potential presidential candidates within his party, won his primary and ultimately the general election — all with the promise of compromise, moderate policies and strong leadership.

As the nation approaches the threat of the debt ceiling at the end of the month, Americans need compromise and strong leadership more than ever before.

This is the urgent season of change every American needs to witness.


Read More

A woman protesting holds a sign that readds, "Our Raise! Labor Safety Costs, surrounded by other people.

Uber drivers participate in a rally outside of the Uber Headquarters on January 05, 2023 in New York City. Uber drivers in NYC participated in a 24-hour strike outside of the company's NYC headquarters

Michael M. Santiago/Getty Images

21st-Century Gig Workers Need Portable Benefits

In recent years, the US labor force has been undergoing a fundamental transformation. In today’s "Uber economy," gig workers, freelancers, contractors, temps, permatemps, remote workers after COVID, and so-called “independent workers” have been championed by Silicon Valley and Wall Street as the “new way to work”—the wave of the future, especially with AI changing the nature of work itself.

Many US consumers have driven in an Uber taxi, but don’t realize that most drivers earn below minimum wage after accounting for vehicle expenses, gas, maintenance, and unpaid time waiting for passengers. Those drivers are so-called “independent contractors,” so the billion-dollar Uber is not responsible for providing healthcare, Social Security contributions, workers' compensation, or unemployment compensation, not to mention sick leave or vacation pay.

Keep ReadingShow less
 Little kids playing with colorful wooden building blocks on the table

Colorado, Maui County, and Washington State are connecting early childhood services and putting families at the center. Here’s what worked and why.

Lourdes Balduque/Getty Images

Community Partnerships Build Systems for Early Childhood Success

In Colorado’s San Luis Valley, a family looking for developmental support for their toddler may drive over an hour to reach a specialist, if one is even taking new patients. In too many communities across the country, like the San Luis Valley, the problem isn’t that services don’t exist. It’s that pediatricians, childcare providers, and mental health professionals are all working toward the same goal, but may not be working together.

When families have to navigate a maze of disconnected programs and providers, children start to miss opportunities for timely developmental support. Not because communities don’t care, but because the systems around them were never built to function as one.

Keep ReadingShow less
US Capitol building
The United States Capitol building with its white dome against a blue sky

Would Congressional Term Limits Make Congress Better—or Worse?

Starting in the 1990’s, the idea of putting term limits on members of Congress became a recurring idea to reform the institution and improve democracy. The idea was born out of the theory that replacing the current crop of legislators with a new batch would produce a better Congress. More than 30 years later we now have quantitative and qualitative data showing the impact of term limits.

Twenty-one state legislatures have enacted some kind of term limit on legislators since 1990. Since then, dozens of academic studies have examined the impact on such factors as: complexity of legislation, influence of lobbyists and staff on legislative outcomes, and interactions with constituent. Here are some key findings.

Keep ReadingShow less
Hand points to the word tax on a screen

Data calculations

Getty Images

Inconvenient Numbers Are a Sign the System Works

Earlier in October, the Bureau of Labor Statistics reported that consumer prices rose 3.7 percent over the past year, a little higher than the month before, with gasoline accounting for more than half of September's increase. Rising prices are the kind of news no incumbent politician wants weeks before an election. The report was published anyway, on schedule. That is the quiet discipline of a trustworthy statistical system. It tells us what is true even when the number is unwelcome to whoever holds power.

So, do Americans trust government data? We do. But that trust is incomplete, and it has room to grow.

Keep ReadingShow less