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The Nevada Independent

If we don’t raise the debt limit, Nevada’s economy may never recover

Zach Conine
Zach Conine
East front of the U.S. Capitol on July 28, 2022. (Humberto Sanchez/The Nevada Independent)

During the pandemic, Nevada experienced the worst economic situation we have ever seen. Our state led the nation in unemployment, thousands of Nevadans sought out emergency food and rental assistance, and countless small businesses were forced to close their doors.

Under my leadership as your state treasurer, we have made tremendous strides in putting our economy back on the right track since 2020. 

Nevada continues to maintain its highest credit ratings in history, our Rainy Day Fund now sits at its highest balance ever, and the treasurer’s office has generated an additional $182 million in investment returns, which have contributed to most of the $251 million in higher than anticipated revenues forecasted by the Economic Forum.

Unfortunately, all of this economic progress we’ve made for Nevada families will be wiped out in an instant if Republicans in Congress continue to threaten defaulting on our nation’s debt.

Playing politics with the full faith and credit of the United States isn’t just dangerous, it’s one of the most fiscally irresponsible things imaginable.

But that’s exactly what Republicans in Congress are trying to do as they seek to hold our economy hostage, while trying to force drastic and damaging budget cuts for programs that people throughout Nevada hold sacred.

Across the country, many far-right politicians talk about the importance of fiscal responsibility, while at the same time making arguments that the United States should decide not to pay its bills.

And unfortunately, it’s not just Republicans in Congress who are contributing to the problem with the debt ceiling. Just last week, former President Donald Trump said that the U.S. should completely default on its debt obligations. Similarly, in January, Gov. Joe Lombardo told the Las Vegas Review-Journal that he didn’t think the federal government should increase the debt limit. 

As Nevada’s chief financial officer who is responsible for keeping our state on solid financial ground, I cannot tell you how dangerous this sort of rhetoric is, and how damaging the outcome would be to all Nevadans regardless of their party affiliation.

If the U.S. was to default on its debt, interest rates would increase for everyday Americans almost immediately, unemployment would skyrocket, and the U.S. government’s credit rating would likely be downgraded, making it harder to pay for vital public services and fund programs like Social Security and Medicare. 

If Congress fails to act and we breach the debt limit, even if only for short period, it would have catastrophic effects for Nevada families, our state budget and the entire county.

Experts estimate that we will hit the debt limit in the next three weeks. Unfortunately, Congressional Republicans are attempting to force the country to either go into default or impose serious economic harm to working families, students, retirees and individuals with disabilities.

The recent Republican bill to raise the debt ceiling contains a disturbing laundry list of cuts and attacks that are deeply unpopular with a wide majority of the American people. It also stands in stark contrast to President Joe Biden’s plan to cleanly raise the debt ceiling without any extraneous policies.

The Republican plan would offshore manufacturing and kill thousands of good-paying jobs and would even jeopardize the over 9 million jobs expected to be created over the next decade by President Biden’s Inflation Reduction Act. 

In fact, Moody’s Analytics says the Republican proposal "would meaningfully increase the likelihood" of a recession and result in 780,000 fewer jobs by the end of 2024 compared with the clean debt limit increase that President Biden is calling for.

The Republican bill would also slash education funding, causing our state to lose over $40 million in annual funding for Title I schools, while also exacerbating Nevada’s teacher shortage in the communities that need the most help. 

Over 1,800 preschool and childcare slots would also be eliminated, while Pell Grants for over 38,000 college students would be significantly reduced.

We know that the promise of a strong public education system is the gateway to opportunity for families across Nevada, and the federal government should be doing all it can to support our kids, teachers and schools — not proposing drastic cuts in funding.

At a time when Nevadans are facing increased energy costs and rising prices for almost everything, the GOP plan would also increase energy bills and raise taxes on working families, while also stripping health care from millions of Americans.

The bottom line is, Republicans in Congress are coming forward with a message of “we’ll either force America to default on its debt and trigger a recession, or we’ll take away health care, cut education, and kill more than 100,000 jobs.” 

This proposal is deeply unpopular, it’s extreme and it’s dangerous. 

Instead of playing politics with our nation’s debt ceiling, we need Congress to act immediately. We need to signal to the financial markets and to the world that the United States of America will pay all of its bills when they come due.

Anything short of that has the potential to negatively impact our economy unlike anything we’ve experienced before. 

Once Congress passes a clean debt ceiling increase, Congressional leaders can work together through the budget process to identify the best ways to spend public dollars. But threatening economic collapse at the expense of workers, kids and retirees should have no place in our public discourse.

Zach Conine currently serves as Nevada’s 23rd state treasurer.


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