Updated as of 6/01/2023 at 8:35 a.m.
The House just passed a bill to raise the debt limit in a race against time to raise the debt ceiling before the United States defaults on our loans. The saga isn’t over yet. The Senate will still have to vote on the bill, which leaves Congress only a few days to raise the limit before U.S. Treasury Secretary Janet Yellen estimates that the country will run out of money to pay our obligations.
But before we can dive into what’s inside the deal, it’s worth explaining what the debt ceiling is and why Black Americans should care about it.
The debt limit is the amount of money the federal government can borrow to meet their existing funding obligations, including Medicare, Social Security, and loan payments. Congress regularly votes to increase this limit so we can borrow more and can keep paying our bills, including our national debt. Despite knowing for months that the United States had officially hit the debt ceiling, which is $31.4 trillion, we still haven’t raised the limi For folks wondering why that’s such a problem; we’ll break it down as simply as possible.
So far, the United States has never defaulted on our loans, but that could happen if we don’t raise the debt limit. It’s not so different from when a regular person defaults on their loans, only on a much bigger and more complex scale. Our credit rating could fall, potentially triggering a deep recession. And because the global economy is so intimately tied to our economy, if we default, we risk not only plunging ourselves into a severe recession; but we could also tank the global economy.
Why Should Black People Care What Happens With the Debt Limit?
Unfortunately, this isn’t the kind of crisis Black Americans can afford to ignore. A deep recession would, in all likelihood, be devastating for Black Americans. Studies have shown that Black Americans are generally among the first groups to be laid off when unemployment is high and the slowest demographic to recover after a recession.
Black Americans would also be disproportionately harmed if the government can no longer fully fund social welfare programs, including Social Security, Medicare, and Medicaid. Just take Social Security, for example. A 2017 study found that 35 percent of elderly married Black couples and 58 percent of unmarried Black older adults relied on Social Security for 90 percent or more of their income.
What Is Going on In Congress With The Debt Limit?
At this point, you’re probably wondering why Congress hasn’t already raised the debt ceiling. The answer is simple, politics.
President Joe Biden went into the debt ceiling fight, asking Congress to raise the debt limit without concessions. However, that didn’t last. House Republicans won a ton of concessions, amounting to $1.5 trillion in spending cuts over the next decade.
Not everyone is celebrating the deal etched out by the White House and House Republican Leader Kevin McCarthy. The NAACP argued that several provisions in the bill harmed Black Americans, including new work requirements for social services, an end to the student loan, and roll-backs of vital environmental programs. Environmental groups have argued that the limits on environmental protections will disproportionately harm Black and brown people.
The bill still has to go before the Senate, where the legislation has faced opposition. Senator Bernie Sanders has already said that he will not vote for the bill on principle. Meaning the fight over the debt ceiling isn’t over just yet.