India Currents gave me a voice in days I was very lost. Having my articles selected for publishing was very validating – Shailaja Dixit, Executive Director, Narika, Fremont
The budget, debt ceiling spat
The political jousting over President Joe Biden’s proposed $6.8 trillion budget proposal and a looming debt ceiling crisis went up a notch last week. Just as President Biden signed executive orders to expand child care and long-term care, as Speaker Kevin McCarthy (R-CA) introduced a debt ceiling bill that limits spending.
McCarthy’s bill ties the debt ceiling increase to budget cuts. To support an increase in the $31.4 trillion borrowing limit for a year, Republicans are demanding a cap on government spending and stricter work requirements for social programs like Medicaid. Rejecting the proposed cuts, President Biden has sought a no-strings-attached uncapping of the debt limit.
A borrowing cap increase is imperative to avert the U.S. government from defaulting on its debt and triggering a global economic crisis, which the treasury predicts could be as early as June.
“I think…if you’re looking at something that’s going to get enough votes to pass Congress and have the President sign it,… said Andrew Eschtruth at a March 17 Ethnic Media Services briefing, “it is probably going to involve some combination of tax increases and benefit reductions.” Eschtruth is Associate Director for External Relations at the Center for Retirement Research at Boston College.
Joint Congressional budget unlikely
The lack of a joint Congressional budget holds billions of dollars of spending hostage – investment intended for education, health, housing, and social service programs that affect millions of Americans. Biden’s budget hopes to raise taxes on corporations and the wealthiest Americans to fund, among other programs, affordable child care for parents, home care for older Americans and people with disabilities, and permanent expanded health coverage assistance through the Affordable Care Act.
“Frankly, it’s impossible to know what will happen in the Republican-controlled House…”, said Chad Stone, chief economist at the Center for Budget and Policy Priorities, at the briefing. “I don’t really expect there’ll be a normal budget process because the House and Senate are so different,” he said.
He said the country may have to make do with a “continuing resolution” or temporary spending bills that will keep the federal government’s lights on in the absence of final appropriations.
“That’s really bad policy, but that may be where we end up.”
National paid family leave, a first for the U.S.
Biden’s budget proposes some of the largest increases in spending for family care.
In a first for the nation, the budget proposes $325 billion to guarantee paid family and medical leave. It would allow 12 weeks of paid leave for all workers caring for a newborn, a sick family member, or themselves. This aligns the federal policy with other wealthy nations in the world and about a dozen states in the U.S. that have their own paid family leave programs, including Washington D.C. and California.
The budget also plans to invest an additional $150 billion over 10 years for the elderly and people with disabilities, so they may afford care in their homes rather than in a nursing home.
Child care and pre-K
Besides bringing back the highly effective pandemic-era child tax credit, the budget includes $600 billion over the next 10 years for affordable early child care and preschool. This will provide an additional 16 million children with affordable child care, and 4 million four-year-olds with a pre-K education.
While the pandemic laid bare the importance of having affordable child care, the policies are unlikely to get an easy pass in Congress, said Elizabeth Lower Basch, Deputy Executive Director of Policy at the Center for Law and Social Policy (CLASP). “These (programs) do build on proposals that didn’t quite make it to the finish line last year, even when Democrats did control both the House and the Senate. So they’ll definitely be more challenging to get through this year.”
Popular, but in financial peril
Although both parties are steering clear of the popular Social Security program, which props up the country’s retirement and disability income systems for 65 million Americans, the safety net trust fund will run into rough weather by 2035, said Andrew Eschtruth of Boston College. “And at that point, again, if there were no changes made before, then the system could continue to pay about 80% of benefits based on incoming payroll taxes,” he said.
The budget proposal has few details about Social Security except that there would be no benefit reductions, and that it would be strengthened by taxing the wealthy. Eschtruth said proposals like raising the full retirement age to 70 from the current 67 years, investing reserves in private stock markets, and raising payroll taxes and the taxable income cap for Social Security, have all made the rounds.
None of them, however, has found a place in Biden’s current budget proposal.