President And Congress Should Act Before Deadline
PHADA President David A. Northern, Sr.
We have all seen and read the reports about the looming debt ceiling deadline. Like the memorable movie Groundhog Day, the circumstances surrounding this issue seem repetitious. Indeed, many of us remember similar high profile “fiscal cliff” debates in 2011 and 2013.
President Biden and congressional leaders have a few more months to address the matter (or not) before a potential economic crisis ensues. Why is the debt ceiling so important and is there anything we can do to affect the outcome?
For a variety of reasons, the U.S. Government has accumulated about $31 trillion in debt, an amount that is greater than the annual size of our national economy. Congress and former President Trump agreed on legislation a few years ago allowing the government to continue borrowing up to the present sum. Without that law, the government would have likely ceased many operations. Previous congresses have raised the ceiling dozens of times.
The Treasury Department recently announced that the limit has been reached, but it has instituted “extraordinary measures” to allow uninterrupted government operations. Treasury anticipates these temporary measures will be exhausted in June, adding that the government could then default on its obligations and be unable to pay some bills unless Congress approves a new ceiling increase.
Some economists and political leaders have raised concerns about the amount of accumulated debt, particularly since annual interest payments will soon equal federal defense spending. In addition, the largest entitlement programs, Medicare and Social Security, will become fiscally insolvent in the coming years if Congress fails to stabilize them.
Because tax revenues cover only about four-fifths of federal spending, the government cannot maintain operations without borrowing money. House Republican leaders assert the present course is unsustainable and will eventually precipitate an economic crisis if left unaddressed. Thus, they say they will not approve a debt ceiling increase unless Congress and the White House agree to spending reductions. Republican leaders have not yet identified specific programs they would cut, but say they hope to outline a budget blueprint in April.
President Biden and congressional Democrats counter that a debt ceiling increase would not authorize new spending, but rather ensures the government covers expenses Congress has already approved. Accordingly, they say there should be no negotiations about raising the ceiling. The President has also said he will outline his proposed FY 24 budget on March 9.
What Would Happen if the Ceiling is Not Raised?
No one knows the answer to this question for certain because the situation is unprecedented. Still, many economists on both sides of the political spectrum have said the failure to raise the ceiling could result in an economic crisis because the full faith and credit of the United States would be undermined. This would likely result in large borrowing cost increases, potential stock market volatility, and possibly drastic cuts in federal government services including disruptions in Social Security payments to millions of senior citizens.
Default could have a major impact on our programs. HAs would potentially lose hundreds of millions of dollars in operating and capital assistance while voucher holders might lose monthly assistance. Some at HUD occasionally minimize the need for operating reserves. The possibility of a default or government shutdown makes a compelling case why we need ample reserves to help protect our residents and properties.
This is not hyperbole. Virtually all federally funded programs would be at risk if our leaders in Washington do not raise the debt ceiling.
What can we do to help ensure this kind of calamity does not occur? Remind leaders in both parties of the need to be responsible fiscal stewards. The government should not fail to honor debts it has already incurred. At the same time, leaders need to recognize the present budget course is “bleak” as the Washington Post opined on February 3. Tax revenues, entitlement reforms and spending should all be on the negotiating table AFTER THE CEILING IS RAISED. The government did not get in this predicament overnight, and it will require the thorough deliberation and commitment of U.S. leaders to solve.
Former PHADA President Rick Parker to Retire
Former PHADA President Rick Parker.
Rick Parker recently announced his retirement as the CEO of the Athens, Georgia Housing Authority, the agency he has led since 1989. Before that, he led the Jackson, Tennessee HA. The announcement was made by Athens Board Chairman Valdon Daniel, who applauded Parker’s accomplishments, which were “too numerous to name” while lamenting that “his leadership will be greatly missed.”
Rick Parker is not only valued in his community, but on the national housing stage too. He has been a PHADA Trustee for roughly thirty years and previously served as our Vice President for Housing, Senior Vice President and ultimately PHADA President in 2003–05.
Known for his keen intellect, integrity and friendly demeanor, Rick has been a highly respected industry leader for decades. PHADA Executive Director Tim Kaiser observed that Parker is one of the industry’s premiere experts on designing rent policies to incentivize work. PHADA often called on him to testify before Congress and HUD on the subject during the Clinton Administration years.
During President George W. Bush’s tenure, Parker also served as a key intermediary with HUD on the negotiated rulemaking committee that led to the development of an updated public housing operating fund. Many of his colleagues have noted that Parker often provided PHADA steady leadership needed to wade through some occasional rough waters over the years.
Rick Parker will remain on our Board of Trustees until later in the spring. Fortunately, we will have the opportunity to render a proper farewell when we convene in Denver for our Annual Convention. For now, I would like to thank Rick for his strong leadership, friendship, and invaluable service.