The United States just averted a critical situation when Congress agreed to extend the country’s debt limit. President Biden is set to sign the bipartisan legislation.
Speaker Kevin McCarthy and North Carolina Republican Patrick McHenry whipped House GOP members into line to authorize the $1.5 trillion debt limit deal struck with President Biden, but ultimate passage required strong bipartisan support as conservatives and progressives in both chambers defected.
Through a wide range of measures, the deal seeks to reduce the size of government, strengthen work requirements for SNAP recipients, and speed up permitting for key energy projects.
The sprawling package does very little to address long-term entitlement spending, which is the primary driver of the $31.4 trillion in federal debt or introduce any pro-growth policies to boost revenue. Not to mention the bill doesn’t hit on the main economic issue worrying American families — inflation.
Despite its shortcomings Republicans and Democrats had no alternative to raising the nation’s borrowing limit. While the consequences of this situation would have been felt nationwide, individual states like North Carolina are uniquely exposed to challenges and repercussions.
The high stakes game of chicken in Congress reveals a number of economic areas in North Carolina that are susceptible to national politics.
If the United States ever reaches its debt limit, it will trigger a series of events that can lead to an economic slowdown. North Carolina, as a state heavily reliant on federal funding, will be particularly vulnerable to this downturn. The reduction in federal spending will directly affect public sector jobs, federal contracts, and various assistance programs, leading to a loss of income for many North Carolinians. Small businesses, which form the backbone of the state’s economy, would also suffer from reduced consumer spending.
Unemployment and Poverty:
With an economic slowdown comes the potential for rising unemployment rates and increased poverty levels in North Carolina. Federal budget cuts may force agencies to downsize or halt operations, resulting in layoffs or furloughs. Additionally, reduced federal assistance programs such as unemployment benefits, Medicaid, and food stamps will leave vulnerable populations struggling to meet their basic needs. This increase in unemployment and poverty will have a long-lasting impact on families and communities throughout the state.
Education and Research Funding:
North Carolina is home to prestigious educational institutions and research facilities that rely heavily on federal grants and funding. However, if the United States reached its debt limit, these sources of funding could face severe cutbacks or even elimination. Reduced funding for education and research will hinder the state’s ability to attract and retain top talent, impacting the quality of education and stifling innovation. This setback will have long-term consequences on North Carolina’s competitiveness and its position as a leader in research and development.
Infrastructure and Transportation:
Another area where North Carolina could feel the impact is in infrastructure and transportation projects. Federal funds play a crucial role in the development and maintenance of roads, bridges, airports, and public transportation systems. If the debt limit is reached, funding for these projects will be significantly curtailed, leading to delayed repairs, stalled construction, and an overall deterioration of infrastructure. This will not only inconvenience residents but also hamper economic growth and trade within the state.
The healthcare sector in North Carolina, like in other states, heavily relies on federal funding to provide affordable and accessible care. Vulnerable populations are currently heavily reliant on Medicaid, the Children’s Health Insurance Program (CHIP), and the Affordable Care Act (ACA) subsidies. However, if the debt limit is reached, these programs may face funding reductions or complete discontinuation, putting the health and well-being of thousands of North Carolinians at risk. Hospitals and clinics will struggle to cover the cost of uncompensated care, exacerbating the strain on an already burdened healthcare system.
The United States reaching its debt limit would have undoubtedly had a profound impact on North Carolina.
From economic slowdown and rising unemployment to reduced funding for education, infrastructure, and healthcare, the consequences will be far-reaching and long-lasting. It is crucial for federal lawmakers to prioritize finding a long-term solution to this reoccurring crisis, ensuring that North Carolina and other states are protected and insulated from political whims.
Smart action is necessary to prevent the dire consequences that could befall the state, its economy, and its residents. Only by addressing the growing federal debt issue can we safeguard the immediate future of North Carolina, but long-term prosperity demands Congress pass a fiscal austerity program, manage inflation, and unleash private sector growth.