NationalStacy M. Brown

What May Happen to Blacks if America Defaults on Its Debt

The crucial vote on the nation’s debt ceiling yielded only a temporary solution.

And without permanent steps being taken, many believe that African Americans in particular could feel the full brunt of the “meteor that’s headed toward our economy.”

Byron Cunningham, a front desk worker at a D.C. hotel, used a century-old refrain to summarize the impact on African Americans.

“When America catches a cold, Black people get pneumonia,” Cunningham reiterated.

He also called attention to the comments made by President Joe Biden, who earlier warned that the reluctance by lawmakers to extend the debt ceiling would result in catastrophe.

“A meteor is headed for our economy,” President Biden declared.

The Senate ultimately voted 50-48 to temporarily delay that fireball and extend the country’s debt limit through the beginning of December.

However, before reaching the deal, Democrats and Republicans fiercely debated their positions with the GOP threatening to allow America to default on its bills.

Such an occurrence would wreak havoc on the nation’s economy, severely compromising and even destroying free lunches for many children in schools, WIC and many other programs.

It also would delay benefit payments to retirees and Medicare and Medicaid providers.

The government has never defaulted on its obligations but partisan politics now pose an imminent threat to ending that streak. It also poses a real challenge for minorities.

“The U.S. government exceeding the debt ceiling is very concerning. But throughout history, change has really come more for white people than it has from people of color,” observed Peyton Leonard, a finance expert with the U.S. Insurance Agents.

Leonard provided the example of when the nation realized the effects of heroin on white individuals. He noted that television began to feature ads and public service and other announcements. Nothing similar occurred during the decades when most believed that only people of color struggled with drug addiction, Leonard remarked.

“White Americans are very privileged in the way the government and organizations treat them. And with this new threat of surpassing the debt ceiling, I’m confident that most white Americans will be just fine while people of color and the poor suffer,” Leonard said. “Our nation will be devastated by the debt ceiling, but even more so, the poor and people of color will suffer unless the government takes action.”

Whitney Tucker of the Center on Budget and Policy Priorities recently noted that if the debt ceiling isn’t suspended or raised in time, the federal government would have to reduce or delay some payments it’s legally required to make.

Funds that help states provide health care, education and other services would likely be among those reduced or delayed.

“The magnitude of the cuts required would be stunning,” Tucker wrote.

The Congressional Budget Office estimated that in the fiscal year 2022 (which began October 1), federal spending obligations would exceed federal revenue by approximately $1.2 trillion under current law.

That is, without a debt limit suspension or increase, the federal government would be unable to meet $1.2 trillion in obligations, Tucker noted.

“Reducing the fiscal year 2022 spending by that amount would be equivalent to cutting every federal program except Social Security, Medicare Hospital Insurance and interest by about 30 percent over the year. In months with low revenue inflows, the required reductions would be even greater,” Tucker continued.

Funding for Medicaid – the largest source of federal aid for states – and public health would face significant risks despite such services counting as vital during a pandemic.

Typically, the federal government reimburses states on a rolling basis for the Medicaid services they provide.

Still, once it exhausts its cash balances and extraordinary measures, Whitney further advised that it would be unable to continue payments unless the debt limit is suspended or increased.

Federal funding for schools, affordable housing, clean water and much more would also face catastrophic cuts. The federal Highway Trust Fund, which provides funding for road construction, public transit and other surface transportation projects, could also face cuts, with severe economic implications for states.

“Universally, the debt ceiling not being lifted is economically detrimental. People of color, however, who are known to have lesser opportunities due to racial bias and prejudice, will surely be affected at a staggering rate,” said attorney Collen Clark, founder of Schmidt & Clark, LLP.

“The imminent shock to financial markets may lead to more loss of businesses, therefore causing unemployment rates to spike once more, along with homelessness. Moreover, since the U.S. workforce is composed of more people of color holding irregular and temporary positions, they may be the first to be let go,” Clark asserted.

Clark added that the inevitable economic unrest would compel the federal government to immediately cease or reduce vital services that are disproportionately relied upon by lower-income and minority households.

“In a nutshell, the observed monopolization of people of color enrolled in governmental aid programs indicates how greater the impact would be for them,” Clark continued.

“The federal government would have to prioritize and ensure the continuation of Social Security, Medicare and Medicaid, unemployment insurance, tax refunds, federal worker paychecks and many other State financial obligations, many of which the poor and minorities don’t have access to or for which they are unqualified.”

Stacy M. Brown

I’ve worked for the Daily News of Los Angeles, the L.A. Times, Gannet and the Times-Tribune and have contributed to the Pocono Record, the New York Post and the New York Times. Television news opportunities have included: NBC, MSNBC, Scarborough Country, the Abrams Report, Today, Good Morning America, NBC Nightly News, Imus in the Morning and Anderson Cooper 360. Radio programs like the Wendy Williams Experience, Tom Joyner Morning Show and the Howard Stern Show have also provided me the chance to share my views.

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