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NewDEAL Leaders Warn Debt Default Would ‘Obliterate’ Post-COVID Economic Gains

News Category: News Posts

For Immediate Release:

April 21, 2023

Contact: Jonathon Dworkin (NewDEAL), 202-660-1340 x5, jonathon@newdealleaders.org

NewDEAL Leaders Warn Debt Default Would ‘Obliterate’ Post-COVID Economic Gains

Open letter to Congress from state and local elected officials raises the alarm that economic recovery “could all be wiped out in an instant if extremists in Congress force us to default on the national debt.”

Washington, D.C. – Amid uncertainty about whether members of Congress will be able to raise the debt ceiling and pay the nation’s bills, state and local elected officials across the nation are calling on them to recognize that debates on future spending priorities should not interfere with the need to raise the country’s borrowing limit.

In an open letter that was also sent to congressional leadership, members of NewDEAL -- a selective national network of the most innovative, pragmatic state and local leaders -- highlight the rapid economic recovery in the three years since the height of the COVID-19 pandemic, including historically low unemployment, record-setting numbers of American opening small businesses, and an increase in long-term investments related to infrastructure, housing, access to broadband, and climate change.

Yet the leaders – consisting of state treasurers, mayors, state legislators, and city and county councilmembers from more than 20 states – warn that a failure by Congress to raise the debt ceiling could have catastrophic consequences. Unemployment would likely spike, and billions of dollars could be lost in retirement and savings accounts.

"Refusing to raise the debt ceiling would obliterate years of painstaking work to rebuild our communities following the COVID-19 pandemic,” they write. “This hard-fought progress could all be wiped out in an instant if extremists in Congress force us to default on the national debt… The victims would be teachers, firefighters, construction workers, veterans, small business owners, retirees, and other residents in our towns, cities, and communities.”

Read the full letter here.

Signatories include Oregon State Treasurer Tobias Read; Nevada State Treasurer Zach Conine; Richmond Mayor and President of the Democratic Mayors Association Levar Stoney; Phoenix Mayor Kate Gallego; St. Louis Mayor Tishaura Jones; San Jose Mayor Matt Mahan; North Dakota House Minority Leader Josh Boschee; and New Hampshire House Minority Leader Matt Wilhelm.

“State and local leaders have worked tirelessly over the past several years to not only lead constituents through the worst of a pandemic, but to help communities rebuild and recover,” NewDEAL Leader CEO Debbie Cox Bultan said when the letter was released. “It is unimaginable that extremists in Congress would threaten this fragile recovery by holding the full faith and credit of our nation hostage. 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.”

The United States reached the debt ceiling earlier in 2023, and the U.S. Treasury has implemented “extraordinary measures” to continue paying America’s bills. When the ability to use those measures runs out, the nation is in danger of defaulting on its debt for the first time in American history.

“As elected officials, we understand political disagreements about fiscal policies,” the letter states. “In a robust democracy, there is an orderly way to examine the nation’s taxing and spending priorities. But the debt limit is not about future spending or tax policies. 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.”

About NewDEAL

The NewDEAL supports a network of about 200 state and local officials -- statewide officials, legislators, mayors, council members, and other local leaders across the country -- who are pro-growth progressives. The organization brings together leaders focused on expanding opportunity, helping them develop and spread innovative ideas to spur economic growth that is broadly-earned and sustainable.

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