The debt ceiling debate is back. On May 1, Treasury Secretary Janet Yellen warned that the US government could default on its debts as soon as June 1. The debt ceiling debate has been a perennial feature of American politics over the last two decades—ever since the national deficit began to balloon as an effect of the Bush Jr. administration’s War on Terror and tax cuts for the wealthy. During the Obama years, Congressional sparring over the debt ceiling was a favored Republican tactic to obstruct their opposition’s agenda. Under the Trump administration, the debt ceiling was suspended, allowing federal deficits to explode by some $7.8 trillion—$2 trillion of which went to tax cuts for big corporations and the wealthiest individuals alone. Now, the GOP has returned to its selective handwringing over the debt ceiling. And House Speaker Kevin McCarthy’s latest plan, the Limit, Save, Grow Act, could have disastrous consequences for average people while once again lining the pockets of the rich. Karen Dolan of the Institute for Policy Studies joins The Marc Steiner Show to explain the current debt ceiling fight and how it could impact your wallet.
Karen Dolan is a fellow at the Institute for Policy Studies.
Production/Post-Production: David Hebden
Transcript
The following is a rushed transcript and may contain errors. A proofread version will be made available as soon as possible.
Marc Steiner:
Welcome to the Marc Steiner Show here on The Real News. I’m Marc Steiner, and it’s great to have y’all with us again.
Now you can’t help but to watch this battle in Congress over raising the debt ceiling. People on the right especially, cry that if we do that, our economy will spiral down and be nothing and explode. But what’s the reality? What about the needs of the American people? How do we get in this situation? How do we get out of it? What do we do as activists? How do you respond? Well, we’re joined today by a scholar and activist who has studied and written about all of this, Karen Dolan. She’s a fellow at the Institute for Policy Studies, which she directs the Criminalization of Race and Poverty Project. Has written widely on numerous subjects and this subject in many publications and is leading figure in the fight for racial, social, and economic justice. And welcome back, Karen. Good to have you with us again.
Karen Dolan:
Marc, thank you. It’s so great to be with you.
Marc Steiner:
So let me add, to give you all a sense of where we’re going today, in one of your latest articles, this is a great quote. You wrote, “Refusing to raise the debt ceiling by Republicans, that’s fiscal terrorism, and President Biden must reject it.” Fiscal terrorism. I like that. That’s a good slogan to use.
Karen Dolan:
Well, it’s accurate, sadly. What the Republicans are doing currently and have done in the past is to use the simple payment of the debts we have already incurred, something that we must do according to the Constitution, that they are using that as a political bludgeon and as a ransom for the wellbeing of all of us. Something that, as a matter of fact, should be done and something that they, as a matter of fact, have done 50 times, 49 times, and they even suspended the debt ceiling under Donald Trump so that they could pass tax cuts to the very wealthy.
Marc Steiner:
The last thing you just said makes me ask the question, what the hell are the Democrats doing? But let me come back to that later. Let me come back to that later.
Lets kind of start by really talking about what this all means. I mean, when most Americans hear this, and most Americans are struggling with debt themselves, and so when you talk about raising debt ceilings, it sets off alarm bells just in terms of people’s popular opinions about what that really means. So lets kind of deal with some definitions here. What we mean by raising the debt ceiling. I mean, what does it come from?
Karen Dolan:
Yes. So I think that the Republicans have very purposefully given misleading talking points on this. They have presented it in such terms as, hey, if you have a teenager and you’ve got a credit card for that teenager and they blow their debt ceiling, their debt limit on the credit card, if you just raise their debt limit, then you’re being very irresponsible.
So first of all, that’s a very privileged position. What parent has a credit card for their teenager? I mean, I certainly don’t. And what credit company is just going to magically raise the debt limit because the parent says to. Excuse me. So let’s put that aside, but that it’s really the opposite is, what the Republicans are calling for is exactly to not pay that debt. So the accurate description of what they’re asking for is, okay, let’s say you have a credit card for your teenagers and they’ve maxed it out, then you would just tell that teenager, don’t worry about it. Don’t pay that debt. That is what Kevin McCarthy and the Republicans are telling us. We’re not going to pay that debt, even though we’ve already incurred it. So that is the real way they should be telling the story, but they’re not. So that confuses people.
Marc Steiner:
So it seems like right now everybody’s split on this. Republicans are split about what to do, divided and nervous about this. The Democrats don’t seem to have a unified message.
Karen Dolan:
Well, I do think the Democrats have a unified message, and when the Republicans are in power, they have the same unified message, is that you raise the debt ceiling because that is the only way to keep the full faith and credit of the United States, and to avoid an instant deep domestic and global recession. Instantly we would be plunged into recession. Moody’s Analytics has said we would instantly lose 2.6 million jobs. There would be 15 million, or up to 15 million, household debt taken out of the economy. It’s more than that, even I don’t have that statistic in front of me and it would be a global catastrophe.
So it’s just something we do as a matter of fact. If we want to talk about what the debt ceiling actually means, it really has no relationship to the real economy. It is an arcane tool that was instituted in 1917, so that for World War I, Congress didn’t have to go to the treasury and ask for permission for any kind of outlay they needed to fight World War I. That is what it served at that time. It was very practical for what needed to be done. Congress didn’t have that ability to do that on their own then. And so since then, it has been nothing but a political tool. It has no bearing on the actual economy.
Marc Steiner:
Yeah. You wrote this other thing when you wrote that, what you were just talking about. It said that if this actually happens, if we let this happen, then it would send our national credit rating down the tubes, plunge the United States and global economies into a crisis. It would destroy 6 million jobs and wipe out 15 trillion in household wealth in this country alone. So I mean, that’s huge.
So the question I have when I read things like that is, that is something that I would expect Democrats, some people in Congress, some people who are activists, the movement who like pulling that out to the American people, because people don’t really understand that. I mean, it’s not popular wisdom.
Karen Dolan:
Well, that’s right. That’s a very difficult concept to get across to people that this debt limit really is not connected in any real way to the economy. And because of the way in which Kevin McCarthy and the Republicans have knowingly misled with their little folksy description of the child’s credit card that is maxed out. And as I explained, that’s not the truth, but it’s an easy talking point. It’s all over the largest cable news channel in the country, and it’s something that Republicans state over and over again, and the Democrats are united and simply say… well, except for Joe Manchin. They simply say, we’re not going to negotiate raising the debt ceiling. That’s something that we need to do to pay the debts we have already incurred.
If you want to have a discussion about a budget, which are the demands that are in this bill that McCarthy has proposed, they’re budgetary spending demands. That takes place in discussions about budget, it has no place in discussions about… there shouldn’t be a discussion on raising the debt ceiling. It’s simply something that must be done to maintain the full faith and credit of the United States. There is nothing else that can be done except for that.
Marc Steiner:
In one of your quotes about Biden, what do you think that Biden and people around him must do that they’re not doing in this battle?
Karen Dolan:
Well, I do wish that in general they were more persuasive in their messaging, that they had more of an understanding that you just reflected, that the American public will hear these little folksy talking points from Kevin McCarthy and the Republicans, and somehow that makes sense to them, even though it’s wrong. And Biden isn’t conveying the same message in the same way that people can understand. The actual position is a little bit difficult because as I said, it’s this old policy that has no connection to the real economy. That’s hard for people to understand, but it happens to be the truth. So I think Biden and his deputies and Democrats who are lawmakers, people who are credible messengers from the same point of view should be out there every day correcting every time Kevin McCarthy tells a lie or misrepresents what is at stake. There should be 10 voices correcting him immediately.
Marc Steiner:
So I think it’s important here also to clear up, we talked a bit about a moment ago, it really isn’t about deficits. And as you wrote about the ballooning of this deficit really began in 2001, all the unfunded wars, tax cuts for the wealthy. I mean that to me is the message it has to get across, about why we’re even in this situation in the first place.
Karen Dolan:
Yes, that’s right. So what you’ll also hear Kevin McCarthy and Republicans saying, and this isn’t to be partisan, it’s whichever party is telling the lies or the parties that we should be calling out. In this instance, it is the Republican Party. So wherever there are lies, whichever side of the aisle we’re on, that’s telling the lies, we have to identify those. And it is absolutely untrue that the Republicans care anything about the deficit or the debt.
Under Donald Trump, he added $7.8 trillion to the national debt, and they raised or suspended altogether the debt ceiling so that they could pass a massive tax cut to the very wealthiest and the biggest corporations. They cared not a wit about the national debt or the deficit or the debt ceiling. Now conversely, Biden actually has presided over a reduction in the deficit. A lot of that comes from the unwinding and ending of the COVID spending. But nonetheless, the deficit came down under Joe Biden, and Joe Biden’s 10-year budget that he just put out in March reduces the national debt by $3 trillion. And he does that while also much more robustly funding rather than brutally slashing the kinds of social programs that we all rely on.
Kevin McCarthy’s proposal, this Default on America Bill, that he has proposed, claims to cut the deficit by $4.5 trillion, whereas Biden’s budget is $3 trillion. But that 4.5 trillion is 100% on the backs of the people who can least afford it, and it has no revenues at all. So if you want to be folksy and talk about our checkbooks and our credit cards and our family budgets, who among us has a budget that doesn’t include income or revenues, nobody. But that is what McCarthy and the Republicans want. They have taken taxes off the table, even though this Default on America Bill, the CBO has said that this will result in a tax hike on low and middle income people, because it rescinds these green tax provisions that were in the Inflation Reduction Act, these tax credits, as well as rescinding the revenues that would come in from going after multimillionaire, billionaire tax cheats.
So there are no revenue raisers, whereas what the Democratic budget is looking at, or the president’s budget, is simply trying to right the wrongs, go after the wealthy tax cheats, not people like you and me. It doesn’t go after anybody that makes less than $400,000 a year, and it doesn’t go after anybody who is doing what they’re supposed to be doing. It’s going after tax cheats. So first thing, you have to go after the tax cheats who are wealthy. You’ve got to close these loopholes. And then you’ve got to institute a fair taxation policy so that people who are very, very wealthy aren’t paying less than the rest of us. It’s common sense.
Marc Steiner:
I mean, it is common sense and especially the way you describe it. And I suppose before we have to go, and one of the things that I find extremely frustrating in all of this is that people who under that… this argument is not being made in ways for the American public to really understand. This argument is not being made for people to be able to grasp it. And whether it’s through social media, advertising and all the ways that we run campaigns, people are very confused by it. And I think that that folks who are battling against this, they’re not letting it be understood that if this goes through, it’ll destroy a lot of lives in America.
Karen Dolan:
So if I could, I’ll paint a few of the things that would happen if a proposal, this Default on America Bill that Kevin McCarthy has proposed, went through, which it won’t, and we can talk about why though it won’t go through as is, but why it’s still very dangerous. But what would happen is car payments, for instance, would explode, student loans would explode, credit card bills would explode, mortgages will all skyrocket. Seniors on social security won’t get their checks. People in near retirement will lose tens of thousands in savings. Veterans may stop getting the health benefits that they’ve earned. They cut schools, they strip away access to childcare. They force communities to lay off thousands of first responders. They kick hundreds of thousands of families out of their homes. They rip food assistance from low-income parents and older Americans. They make it easier for oil, gas and mining polluters to poison communities. And they give a huge windfall to billionaires and big corporations. That’s what it means.
Marc Steiner:
So as we conclude, Karen, how does the activist in you start talking to people about how you get that message out?
Karen Dolan:
Well, we should be on top of this all of the time. So one thing that I know a lot of advocacy groups have been doing is to try to get this message out that I was just saying to you. And so anybody that hears this, when you are in your place of worship, when you’re talking to your neighbors on the street corner, when you’re around the water fountain, start talking about this in real terms so that people understand what it is. And at the same time, call your senator and representative every day, five times a day and say, we are not going to sacrifice all of our wellbeing at the altar of billionaires and multimillionaires anymore. These are not the values that we have, and we do not accept it and we will not vote for you if you vote for this.
There are, in Republican districts, there are many, many rural, poor, low income, moderate income people who will suffer greatly from these policies. There are Republicans in Midwestern districts that really want these ethanol tax credits, that is a big boon to their economies, and they really don’t want this, that Kevin McCarthy has proposed. So there are lots of divisions within the Republican Party that what Kevin McCarthy did and many people saw on national TV when he was running for the speakership that took 15 votes to get him into the leadership position, he made a deal with the devil with the most extreme elements of the Republican Party.
And they are the ones that are dictating these extreme pieces that also would just exact blood and pounds of flesh out of the people who can least afford it, just for them to be able to receive food and housing, help with rent at a time where we have inflation and skyrocketing rents and skyrocketing grocery prices. These extremists in the Republican Party would literally take food out of the mouth of babies. They want to slash women, infant and children assistance, it blows the mind. And Republicans have more, actually more, ethanol production plants in their districts and more rural and more poor people in their just districts than Democrats would.
These very proposals would hurt their constituents even more. So that has to be hammered home. And people who live in their districts have to let them know this. And then outside of your personal responsibility, there are lots of movements to join. I mean, if you’re interested in food, you can look at the Food Resource and Action Committee. You can look at Feeding America. You can find out how to get involved in advocacy organizations that work at the federal level. And if you are interested in sort of combining all of these things, you can Google what ways to plug in. The Coalition on Human Needs is a coalition of about 200 advocacy organizations or more around the country that have state chapters, and you can plug in. You can look at what the Poor People’s Campaign is doing. They’ve got national presence with local chapters that are working on human needs. So there are many ways to plug in to join activism and to join advocacy, as well as to talk directly to your representatives.
Marc Steiner:
Karen Dolan, it’s always a pleasure to talk with you because your voice and your ideas, as I said, straightforward and clear. And well, thank you for your work and thank you for taking your time today on a busy day to join us to kind of break through all of this. Thank you so much.
Karen Dolan:
Marc, thank you so much. It was my pleasure.
