AUSTIN, Texas - Texas Congressman and presidential hopeful Ron Paul is asking his fellow Republicans to refuse to raise the national debt limit. It's just "establishment pressure," he says, that portrays a possible government shutdown this summer as reckless. But a variety of business groups and economists disagree. Failing to raise the debt ceiling, they say, would jack up the cost of every mortgage, business loan and municipal bond.
Chuck Marr, director of federal tax policy at the Center on Budget and Policy Priorities, warns that the markets might react, even to just the threat of a government default.
"Interest rates rise sharply, the dollar falls sharply. A crisis at a time when the unemployment rate is already unbelievably high. Even if you don't intend to go through with it, why would a country do that to itself?"
Marr warns it could throw the country back into recession. Business groups from the U.S. Chamber of Commerce to Wall Street banks have said the debt ceiling should be raised quickly.
Republicans in Congress want to use the debt ceiling fight to force cuts to the federal deficit. But Marr says that could actually increase the deficit, by raising the interest the government has to pay, which, in turn, could hurt all borrowers.
"Interest rates are interconnected, so the borrowing rate for government goes up, that can send shocks through the rest of the economy, and then it affects the whole country. It's irrational for a country to do that to itself by design."
Marr describes the situation as bizarre, a self-inflicted crisis that risks a self-inflicted disaster. He says it would look as if the nation were intentionally damaging its own ability to do business.
"This is extremely serious; you do not flirt with default. I mean, the United States has never defaulted. There is no reason to play games of chicken with default; it's a very, very serious issue."
Instead, Marr says, the deficit should be dealt with in what he calls a balanced way.
According to the Economic Policy Institute, nearly half of the deficit is the result of falling revenues during the Great Recession. Another third is a combination of the Bush-era tax cuts and the cost of current wars.
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Today, groups working with lower-income families in Connecticut are raising awareness about the state's "benefits cliff" with a day of action.
The benefits cliff is when a person might get a raise, have a kid with a part-time job, or some other income increase which then makes them ineligible for certain benefits. The changes can have severe impacts on communities and disproportionately affect families with children.
Stephen Monroe Tomczak, professor of social work at Southern Connecticut State University, said it is part of a larger workforce problem.
"People, particularly people of low income, are in a sense disincentivized to participate in the labor force and denied adequate jobs and income when they try to do that," Tomczak explained.
Several General Assembly budget bills could have dealt with the issue but most failed, which inspired today's action, a mock funeral procession to the governor's office to eulogize the bills, including the refundable Child Tax Credit, a housing voucher funding boost bill, and a bill eliminating the asset limit on the HUSKY C medical insurance program.
Social service advocates know the bills will resurface in next year's budget process.
Rose Ferraro, program lead of health justice policy advocacy for the Universal Health Care Foundation of Connecticut, said people are taking alternate steps like going to food banks or avoiding medical care to cover lost benefits.
"Folks will lose their rental assistance and then, they will sort of have to make some tough decisions," Ferraro noted. "'Do I put food on my table or do I make sure to pay rent?' And, so it becomes a sort of untenable position."
Ferraro added interwoven state and federal funding makes it hard to reach the core of the issues leading to benefits cliffs. One eulogized bill would have established a benefits cliff pilot program. For two years, it would have provided subsistence for people who've reached the benefits cliff.
Disclosure: The Universal Health Care Foundation of Connecticut contributes to our fund for reporting on Health Issues, Housing/Homelessness, Human Rights/Racial Justice, and Poverty Issues. If you would like to help support news in the public interest,
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New York towns are reaping many benefits since the Inflation Reduction Act was passed.
Along with funds for larger clean energy projects, the state was awarded $158 million for the IRA's Home Energy Rebates program.
Smaller towns and villages use these grants to implement their climate action plans.
Brighton Town Councilmember Robin Wilt said an IRA grant they applied for will help upgrade the town's HVAC system.
"We will be implementing geothermal and then use a solar array to make the system close to net zero, not quite," said Wilt. "I think we'll get 55% of our energy back with the solar panels."
The bureaucratic process to access the funding was challenging, but some groups are working with the Department of Energy to improve it.
Wilt said feedback on the clean energy projects has been positive. Future projects using IRA funding include increasing walkability and sustainable redevelopment.
Critics have said the IRA includes multiple provisions to increase fossil fuel production.
Towns nationwide are using IRA grants to bolster clean energy projects.
Joel Hicks is a council member for the Borough of Carlisle, Pennsylvania.
They've just applied for a grant to work on energy efficiency and solar projects with Harrisburg. He said this will have positive impacts beyond establishing clean energy.
"We were really excited at this potential," said Hicks, "because we saw that the cost savings we would have for putting in substantial solar projects on our public property would actually fund many of our other public municipal goals."
These include purchasing an electric vehicle fleet and having more efficient solid waste programs.
One thing Hicks said he wants to see in future is state and local governments helping small towns and municipalities with putting together their IRA grant proposals.
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A new report analyzes Pennsylvania's existing voucher programs, that divert public funds to private schools.
This comes on the heels of Gov. Josh Shapiro's plan to create a new voucher program for K-12 students.
Diana Polson - senior policy analyst with the Keystone Research Center - said last year's Commonwealth Court decision ruled that Pennsylvania's system of funding public education is unconstitutional, therefore the state doesn't have a dollar to waste on expanding existing private-school voucher programs or creating a new one.
"The basic-education funding commission estimated the state must pay $5.1 billion over the next seven years to make sure our public schools are funded equitably and adequately," said Polson. "Meanwhile, our report finds that existing private-school voucher programs are siphoning millions from taxpayers with little to show for it."
Supporters argue that vouchers let children leave under-performing public schools and get a better education at private schools.
Polson said Pennsylvania's voucher programs have no "meaningful educational or financial accountability," so they really have no way of knowing if these programs operate as intended or are beneficial to low-income or moderate-income students.
Polson said the report reveals that the programs have grown, and just this year they will cost the state nearly $500 million.
However, these voucher programs exclude students in rural areas, because there are few if any participating private schools in these regions.
Local public schools remain the primary option for most rural families.
"We also found that private schools receiving these funds are allowed to - and do - routinely discriminate against students for reasons including disabilities, sexual orientation, religious beliefs and more," said Polson. "These programs are also exclusive. They subsidize the state's most elite and expensive private schools as well as affluent families."
Polson said the report reveals that the Independent Fiscal Office estimated that the average EITC program scholarship was $2,314, while the Opportunity Scholarship Tax Credit was slightly less at around $2,000.
The cost of attending one of the top 25 private schools in Pennsylvania is around $41,000 per year. This means these schools are still out of reach for many low- and moderate-income families.
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