Debt Ceiling Op-Ed By Rep. Hansen Clarke

Over my first six months as a member of Congress, I’ve seen something hopeful happen in Washington: a strong bipartisan consensus has emerged around the need for government to live within its means and reduce the size of its deficit and debt. Yet, instead of making serious compromises to conclude a debt-reduction agreement, some in Congress are playing with fire. By threatening to allow the United States to default on its financial obligations
if their specific budgetary demands are not met, many Congressional Republicans are jeopardizing our economic recovery and actually exacerbating our long-term debt problem. If Congressional leaders follow through on their threat and refuse to temporarily adjust the federal debt ceiling—a routine action taken seven times during the
George W. Bush Administration—we will see severe declines in home prices, delayed Medicare and Social Security payments, and even suspended payments to our men and women in uniform. Ultimately, this unnecessary default would damage America’s global economic credibility and make it more costly to pay off our long-term debt.
Consider first how a failure to adjust the debt ceiling would decimate housing markets in Metro Detroit. Because a default crisis would create a perception among international creditors that investing in the US government is risky, the
US Treasury Department would need to begin offering higher interest rates on its bonds. Mortgage rates, as well as other interest rates, would rise alongside these Treasury bond interest rates, making home ownership less affordable.
With lower market demand for homes, real estate prices would slide even further, and even more homeowners would find themselves “underwater,” owing more money than their homes are worth. More foreclosures would ensue. More jobs in the construction sector would be lost. Metro Detroit and other regions with vulnerable housing markets and high unemployment rates would bear the brunt of the disaster.
A volatile housing market would hardly be the only negative consequence of failing to raise the Congressionally-set debt limit. Because higher Treasury rates would make it more costly for Americans to buy big-ticket items like cars, Michigan’s economy would take a further hit. Because higher rates would make it more expensive for entrepreneurs and companies to borrow money to launch initiatives or invest in equipment, the engines of national economic growth would grind to a halt. On top of this, a partial government shutdown could follow a debt default, temporarily suspending payments to military service members and recipients of Social Security and Medicare. This would cost a minimum of 800,000 jobs and immediately increase an already staggering 9.2% unemployment rate—16.2% among African Americans. All of this would shrink the size of our economy, making it more difficult to grow out of our debt.
Debt Ceiling Op-Ed By Rep. Hansen Clarke By threatening to allow the United States to default on its financial
obligations if their specific budgetary demands are not met, many Congressional Republicans are jeopardizing our economic recovery and actually exacerbating our long-term debt problem.  This catastrophe is easily preventable. President Obama has agreed to serious cost-cutting commitments, putting 12-year spending cuts worth upwards of $4 trillion on the table. While I appreciate Republican energy and passion in leading the charge to tackle our debt, it’s time for them to make similar concessions. Specifically, I urge my colleagues to accept that closing the budget shortfall demands revenue increases as well as cuts. This means allowing some of the fiscally irresponsible 2001 and 2003 tax breaks for the wealthiest 1% of Americans to expire Most urgently, Washington politicians need to disavow the notion that they can hold the American economy hostage as a bargaining tactic in budget deliberations.
Democrats and Republicans right now stand united on a core principle: that current spending must not put a burden of debt on our children and grandchildren.  Let’s get past high-stakes political games, and get serious about making our
fiscal situation sustainable.
DISCLAIMER: : This statement is the written opinion of Congressman Hansen Clarke and does not necessarily represent the views and opinions of Members of the Congressional Black Caucus. The views expressed should only be attributed to Congressman Clarke.