Debt Ceiling Bill Would Devastate People with Low Incomes, Nation’s Economy

The following statement can be attributed to Indivar Dutta-Gupta, president and executive director, Center for Law and Social Policy (CLASP)

Washington, D.C., April 26, 2023, 8:00 p.m.—The debt ceiling bill introduced by Speaker of the House Kevin McCarthy and passed today on a narrow margin by the U.S. House of Representatives allows out-of-touch extremists in Congress to hold our economy hostage to their demands to slash domestic spending and cruelly limit access to public benefits that strengthen our nation. The bill would set indefensibly low, rigid, and arbitrary caps on appropriations, allowing no adjustments for inflation or population growth and no ability to respond to emerging needs, such as a recession—which the bill and legislative strategy would make more likely—a national security crisis, or the next pandemic.

As funding falls behind the costs of meeting our nation’s needs each year, the bill’s cuts would grow over time. The cuts, which would be deep if spread across all discretionary programs, would be unprecedented if limited just to domestic discretionary programs other than veterans’ care. The legislation slashes everything including programs that support economic success such as child care, school meals, job training, and housing assistance as well as core public functions such as transportation and food safety.

The bill also limits access to benefits and health coverage that help secure a basic foundation for families to access opportunity and thrive—including the Supplemental Nutrition Assistance Program (SNAP), Medicaid, and Temporary Assistance to Needy Families (TANF)—for those who can’t prove they are working or exempt. We know from extensive evidence that such requirements are ineffective in promoting work. In fact, many people lose benefits even though they are working, or should qualify for an exemption, but fail to keep up with the paperwork requirements. Because TANF operates through block grants to states, the TANF provisions would not even save the federal government money. These requirements are solutions in search of a problem. They are based on stereotypes that people with low incomes do not wish to work; these narratives are demonstrably grounded in racism and will disproportionately harm those who are already the most excluded and marginalized by racism’s pervasive effects. Yet these requirements harm everyone and disrespect the unpaid caregiving and other work that supports our society. Conditioning supports and services that help meet our most fundamental needs on formal employment has no place in a just and prosperous society.

And other provisions in the bill, which purports to reduce the federal deficit, would actually increase it by making it harder for the federal government to collect the taxes that wealthy individuals and corporations are legally required to pay. This contrast makes clear the true priorities of the bill’s supporters.

This legislation is not a serious attempt to avoid the disastrous effects of defaulting on our debt, but an ideological wish list that would also wreck our economy. CLASP urges the House of Representatives to move forward quickly with a serious and clean bill to avoid the risk of default, which threatens to destabilize the financial markets even before we reach the “x date” when the debt ceiling prevents the nation from paying our bills.