On the day that the Senate voted on the mis-named “Fiscal Responsibility Act”––the deal that House Speaker Kevin McCarthy and the White House struck so that the House would stop holding the debt ceiling hostage––Seed the Vote and Convergence Magazine co-hosted this panel. “Debt Ceilings, Federal Deficits and Shutdowns––Oh My!” brought political and historical context to the three months of budget brinksmanship that brought the US economy to the point of default. Jason Negrón-Gonzales, Seed the Vote’s incoming political director, laid the groundwork for a conversation between San Francisco Rising Co-Director Emily Lee and Columbia University economist Eric Verhoogen.
Negrón-Gonzales’ PowerPoint included details about the national debt and deficit spending, as well as an overview of competing budget proposals. President Biden’s, which would increase investments in childcare, care work, and green technology while raising taxes on the super-rich, pointed toward mostly progressive priorities (except for the proposed 3% increase in military spending). After threatening to hold up the debt ceiling, the Freedom Caucus made their own proposal that included deep cuts in every social program (except Medicare and Social Security), a reversal of green investments, and more tax cuts: an austerity budget that Verhoogen noted would likely halt economic recovery from the pandemic and hasten a recession. Holding the debt ceiling hostage was the Freedom Caucus’ weapon of choice for forcing cuts that would be unpopular if they tried to win them through the democratic legislative process.
Controlling the narrative about debt, deficits, and taxes
The MAGA right has the power to weaponize the debt ceiling because of 40 years of neoliberal narratives about national debt, deficits and taxes. The Right’s messaging sounds like commonsense: “debt is always bad; we must live within our means and get spending under control.” This narrative is backed up with dog-whistles about who is “taking” from taxpayers, leaning heavily into white resentment. They want us to believe the national debt is just like your personal, or family debt. But this is misleading. Unlike a household, the federal government issues its own currency and finances its spending through secure treasury bonds.
An honest conversation about debt would recognize how vital these bonds are for providing the services that our society needs, like infrastructure, public health, clean air and water, safe food and drugs, occupational safety, and much more. During a crisis, like the recent recession and the pandemic, increases in federal spending are vital for our recovery. Deficit spending, which happens when yearly revenues are lower than yearly expenses, is necessary at a time like this. If the Right really cared about deficit spending, they would raise revenues.
