How Will the Debt Ceiling Bill Impact African-Americans?

Some experts are predicting higher unemployment.

Posted: 08/03/2011 10:52 PM EDT
Filed Under debt crisis, Economy

In a conference call on Tuesday, House Assistant Democratic Leader James Clyburn (D-South Carolina) praised the debt ceiling bill for including $44 billion more in the federal budget for domestic programs for the 2012 fiscal year.

“So those of us who are interested in bolstering up non-security spending for infrastructure, education, Pell grants, for low income programs, CHIP, TANF, SNAP, for Veterans…we have $44 billion additional dollars than what we have now,” said Clyburn, who was one of only 13 Black Democrats to cast a yes vote on the bill.

But the remaining Congressional Black Caucus members and some economic experts fear that debt ceiling will drastically cut those and other programs that benefit African-Americans and low-income people.

“I think it’s a deal that’s going to make things tougher for African-Americans, mainly because it cuts a lot of spending out of the economy and is likely to slow its growth and therefore increase the unemployment rate,” economist Thomas Boston told BET.com. “When that happens, African-Americans are hit particularly hard.”

The Georgia Institute of Technology professor predicted that the corporate sector would continue to be unwilling to invest in jobs because the spending-cut details have not yet been outlined, causing ongoing uncertainty. Additionally, Boston said, there will be an enormous trickle-down effect as states and local municipalities are forced to also make cuts because they will likely receive less federal aid and have no way to supplement that loss.

“The cuts will start out relatively modestly,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities. “But at the same time, when we’re in an environment in which it’s all about cut, cut, cut, it’s hard to do things that would boost the economy.”

The extra weeks of unemployment benefits and the payroll tax cut are expected to retire at the end of the year, which will take money out of the pockets of long-term unemployed people and most wage earners, he added. Stone noted that President Obama called for the two programs to be extended, but the big question is where the money would come from to fund them.

Andrew Fieldhouse, an analyst at the Economic Policy Institute, believes that programs like Head Start and WIC could be on the chopping block and expressed skepticism that Pell Grants will continue to be safe.

Like Boston, he also said that the most immediate impact on African-Americans would be felt in the area of employment because major cutbacks in government spending will slow the nation’s economic recover. In addition, he said that if the unemployment benefits extension and payroll tax cut programs aren’t extended, the result would be a loss of 1.8 million jobs in 2012.

Both Stone and Boston expressed deep concern about the debt ceiling “super committee” that will be tasked with identifying $1.3 trillion in deficit reductions and pushing them through Congress. The four leaders in the House and Senate will each appoint three members. But, predictably, the Republicans have said they won’t appoint anyone who supports raising revenues and the Democrats won’t appoint members who would cut entitlements. Stone said that he could not imagine a scenario in which the committee would be able to reach an agreement.

“We’re back at another impasse,” Boston said.

Related Exclusive Video: White House Senior Advisor Valerie Jarrett on the Debt Limit


Part 1: What happens if the U.S. defaults on its debt obligations?

Part 2: As the Black-white wealth gap widens, will core social programs be preserved?

Part 3: How can the Obama administration ensure Americans' needs aren't forgotten?

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