Shutdowns and paycheck-to-paycheck living
Speaking Security Newsletter | Note n°217 | 30 September 2023
Situation
Looks like we’re headed for a government shutdown. Or maybe not; no one’s sure.
All but essential government operations stop during a shutdown. What operations count as essential is determined by the White House (the Office of Management and Budget, specifically). Among those typically classified as essential are what you’d expect: military and law enforcement, power grid maintenance, in-hospital care, air traffic control, bare-bones judicial functions, Social Security checks, and Medicare and Medicaid benefits.
Nobody would put collecting student loans payments on the same level as those operations. I mean almost nobody: the Biden administration decided that restarting student loan payments is an essential government function too. “Even if Republicans needlessly shut down the government, loan payments will continue to be due,” said a Department of Education spokesperson.1
The White House said back in 2021 that transitioning back into repayment was a high priority. It’s certainly acting like it now: If there’s a shutdown, student loan repayments resume, but what gets halted? Food and water safety, nutrition assistance, transportation, infrastructure, and other important programs.2
In other words, the Biden administration’s plan is to demand money from the public on exactly the same day many crucial government services are halted.
Living paycheck to paycheck
Sixty percent of Americans are living paycheck to paycheck, according to a recent LendingClub/PYMNTS report. Only a percentage is given, but based on the methodology and Census Bureau population data, that translates to nearly 153 million people (only adults are counted).
Of those, 64 million wouldn’t be able to accommodate the addition of a new, student-loan-sized monthly bill. This finding was buried in the report; I’m not sure why they didn’t put it at the very top:
“Facing a sudden increase in debt payments of $500 — from the resurgence of student loan payments, for example — would leave 42% of paycheck-to-paycheck consumers unable to meet their debt obligations.”
^Alt text for screen readers: Over 150 million Americans live paycheck to paycheck. This line chart shows the number of U.S. adults living paycheck to paycheck, concluding at 152.5 million as of August 2023. Data comes from the U.S. Census Bureau and LendingClub/PYMNTS.
-Stephen (@stephensemler; stephen@securityreform.org)
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This statement was in response to congressional progressives urging Biden to delay repayments, so the title of the Politico article really should’ve been “White House resumes student loans, prompting progressive groans.” Does anybody actually read these footnotes?
Essential “non-essential” programs, if you will.