The Debt Ceiling Stakes Couldn’t Be Higher
May 19, 2023
The risks and available options, analyzed.
The Roosevelt Rundown features our top stories of the week.
The Preventable Costs of Debt Default
With the debt ceiling deadline less than two weeks away, a disturbing reality is becoming likelier by the day: a United States unable to pay its bills for the first time in its history, unable to serve its people, and facing economic catastrophe that could cost millions of jobs and the nation’s global standing.
This week on the blog, economic and legal experts explained the profound stakes of this moment—a default that would not just shatter a strong labor market but could violate the 14th Amendment and further erode our democracy.
They also outline the options available to President Biden as the clock continues to tick.
- The Debt Ceiling Fight Is a Dire Economic Risk—and a False Debate by Roosevelt Chief Economist Joseph Stiglitz
- Defaulting on Our Debt Would Cause the Next Great Recession by Roosevelt Director of Macroeconomic Analysis Mike Konczal
- The Supreme Court Should Not Get to Decide If We Default on Our Debt by Steph Sterling
- Taking Care to Faithfully Execute All the Laws on the Debt Ceiling “X-Date” by Joseph Fishkin
A Step Toward Free Tax Filing
Last week, 4.4 million TurboTax customers got word that they were part of a $141 million settlement with TurboTax parent company Intuit—because they paid for services that should have been free to them.
It makes a great case for the new Direct File pilot the IRS announced this week, Roosevelt’s Emily DiVito and Matt Hughes argue.
“When filing taxes costs Americans two billion hours and $30 billion each year, and makes routine interactions with government unnecessarily arduous, we know the system is broken,” they write.
“If the IRS’s Direct File pilot succeeds, American taxpayers will experience what many around the world have enjoyed for decades: free and easy filing.”
Learn more in “The IRS Is Piloting a Direct File System. The TurboTax Settlement Shows We Need It.”
Understanding the Effects of Windfalls
From 2020–2021, the unique economic impacts of the COVID-19 pandemic prompted policymakers to implement direct-cash policy solutions, including the expanded Child Tax Credit (CTC) and stimulus checks, to boost individuals’ and families’ financial security.
Despite the clear social and economic benefits of these payments, however, false narratives—rooted in racist conceptions of irresponsible spending habits—prevailed, and contributed to policymakers’ decision to cut the expanded CTC.
In a new report, Katherine Rodgers, Sydney A. Grissom, Lucas Hubbard, and Roosevelt senior fellow William “Sandy” Darity, Jr., examine evidence that debunks those myths and sheds light on the positive benefits people experience from large windfalls, like lottery wins and inheritances.
As Roosevelt’s Shahrzad Shams explores in a blog post about their analysis, the evidence on cash transfers has a lot to say about reparations.
Read the full report, and coverage in MarketWatch.
An Academic Walks into a Diner
One of the clearest ways to see how a political idea lands in the real world is to hit the campaign trail. These ideas go through the ultimate test in cafes and backyards, in conversations with people who want to share their own experiences. Last year, Harvard political philosophy professor Danielle Allen was able to experience this firsthand when she ran for governor of Massachusetts.
On a new episode of How to Save a Country, Allen—who is also the founder and president of the organization Partners in Democracy—speaks with hosts Felicia Wong and Michael Tomasky about her 15-month campaign and what she learned about our political institutions.
Listen now, and follow for new podcast episodes every Thursday.
What We’re Reading
The IRA Is an Invitation to Organizers [by Roosevelt fellow Kate Aronoff] – Dissent
SVB’s Collapse Resurrects the Idea of Banking without Bank Runs [feat. Roosevelt senior fellow Saule Omarova] [paywall] – Bloomberg
The Era of Neoliberal US Foreign Policy Is Over – Foreign Policy
What a Debt Default Could Mean for America’s Superpower Status – Vox