My Point of View: Explaining the debt limit disaster
Published 8:45 pm Tuesday, May 16, 2023
My Point of View by Joe Pacovsky
We suffer unexpected natural disasters. We are now experiencing a deliberate slow-motion man-made disaster. Republicans in the nation’s Capitol are refusing to raise the debt ceiling separate from a package of devastating spending cuts. This is a recurring Republican extortion scheme (from which they spared President Trump) that is totally unnecessary and has the potential to wreak havoc over our economy and standard of living.
It could wipe out millions of jobs and trillions of dollars of household wealth. Not an act of God, but of House Republicans.
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The Republican majority in the House of Representatives has passed legislation that would reduce discretionary spending by 22%. The bill would lift the debt limit by $1.5 trillion or until March 31, 2024, just before the next election cycle. The bill returns funding to fiscal 2022 levels and limits increases in spending to 1% per year. The U.S.. dollar is the global reserve currency and is treated as risk-free, which gives the United States unrivaled financial power.
Our enemies would love to replace the dollar as the global reserve currency. The Republican plan threatens the dollars status.
Some examples of basic services that serve ordinary Americans and business that could be cut include shutting down 375 air traffic control towers, 81,000 jobs lost across the Veterans Health Administration system, $4 billion in funding for schools serving low-income children (equivalent to removing 60,000 teachers) and many other services that ordinary Americans depend on.
Republicans claim their plan does not cut Social Security and Medicare payments for our elderly retirees, but 6% cuts to the Social Security Administration could delay payments and reduce access to in-person services at field offices. Furthermore, financial markets are already reacting badly to the reckless threat of the United States potentially defaulting on its debt. Interest rates are increasing, and stock markets are falling. This is already impacting people’s private savings and the cost of living.
One immoral provision — among many in the Republican plan — mandates that taxpayers fully preserve tax credits for ethanol producers while at the same time cutting nutritional assistance for 1.7 million women, infants and children. This would throw millions more children into hunger. The Republican proposal preserves payments that benefit the ethanol industry at the expense of hungry children.
When the last corn price spike occurred and people who depend on corn for their diet had difficulty paying for food, the ethanol lobby claimed that the huge quantities of corn being used to produce ethanol did not increase corn prices. If ethanol production does not increase corn prices what is the big deal saving the ethanol subsidy? On the other hand, if these huge quantities of corn being used for fuel instead of food does increase corn prices it directly increases the costs of feed for dairy and livestock producers and does impact food prices and inflation.
Republicans claim that the capitalist system is the most effective way of increasing incomes. It is, but Republicans have put their thumb on the side of the scale that favors windfalls to rich individuals and large corporations over regular people and small business. Now they want to cut spending on programs that serve ordinary Americans while protecting spending that lines the pockets of their wealthy donors.
This is not a natural disaster. This is unnecessary and expensive brinkmanship.
Joe Pacovsky is a member of the Freeborn County DFL Party.