Snapshot: Five Key Points from NewDEAL Leaders Debt Limit Letter to Congress

3 min readMay 3


Photo by Matthew Bornhorst on Unsplash

In April, NewDEAL Leaders called on Congress to raise the country’s debt limit.

The debt limit is a cap imposed by Congress on how much money the executive branch can borrow in order to pay for spending bills already passed by Congress. Because Congress (in a bipartisan manner) has required the federal government to spend more money than it takes in, the executive branch must borrow money to make up the difference.

While the debt limit has no bearing on future spending and taxing priorities, some extremists in Congress are threatening to allow the United States to default on its obligations unless President Biden agrees to draconian cuts in programs such as veteran health care, border protection, and others.

If Congress refuses to raise the debt ceiling in time (with the Treasury Secretary setting a June 1 deadline), economists warn that there would likely be a recession, massive job losses, and a ripple effect that threatens the global economy.

NewDEAL Leaders warned that those projections would have real-world consequences in their cities, towns, and communities. Here arefive key points from their message to Congress:

  1. We should recognize all of the economic progress in our communities since the depths of the COVID crisis. With federal, state, and local leaders working together, our nation has rebounded from a recession, adding more than 12 million jobs and seeing a record number of Americans apply to open small businesses. “We’ve clawed and scraped our way through a once-in-a-century crisis,” Leaders wrote. As communities stabilize, “states and localities are making long-term investments in areas such as infrastructure, housing, access to broadband, and climate change.”
  2. Default puts the entire U.S. economy at risk. Experts warn that a default could lead to a dramatic rise in unemployment, as well as skyrocketing interest rates and general economic instability. “This hard-fought progress could all be wiped out in an instant if extremists in Congress force us to default on the national debt,” NewDEAL Leaders wrote.
  3. Default threatens to impact everyone in all our communities. A recession does not care if you are a Democrat, Republican, or independent. A tumbling economy does not differentiate between women and men; old and young; Black, White, or anything else. “Defaulting on the national debt would be a self-inflicted wound,” Leaders wrote. “The victims would be teachers, firefighters, construction workers, veterans, small business owners, retirees, and other residents in our towns, cities, and communities. And it would happen just as we are beginning to get back on our feet.”
  4. Low-income residents would be hit the hardest. While economic hardship would be shared by many, refusing to increase the debt limit would be felt most acutely by the nation’s most disadvantaged residents. Leaders pointed to an analysis by the Center for Budget and Policy Priorities showing a default by the federal government could “delay or even stop grants to state and local governments for programs like Medicaid, child care, Title I education, foster care, unemployment insurance, housing assistance, and Supplemental Security Income.”
  5. Here’s what needs to happen. NewDEAL Leaders were crystal clear about what should happen: Congress needs to raise the debt limit immediately. “The debt limit is not about future spending or tax policies,” they wrote. “It is about paying the bills racked up over the past several decades, approved by both Republicans and Democrats. Congress should do what it has always done in the past: Come together to raise the debt ceiling.”

The United States has never defaulted on its debt. Congress passed a clean debt limit increase three times during the Trump administration.

“It is unimaginable that extremists in Congress would threaten this fragile recovery by holding the full faith and credit of our nation hostage,” Debbie Cox Bultan, NewDEAL CEO, wrote when the open letter was released. “Congress needs to do their job, pass a clean debt ceiling increase, and stop using what should be a routine task as an opportunity for brinkmanship.”




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