The U.S. statutory debt ceiling is an absurd, arbitrary, and worthless political institution, yet it also poses a profound danger of throwing the economy into a full-blown crisis whenever it looms. Elon Musk’s behavior over the past month is eerily similar—including the exact mechanisms through which this behavior could cause a crisis. If the statutory debt ceiling is a potential economic crisis looking to leap off paper legislation, Musk and his Department of Government Efficiency (DOGE) team are a potential crisis blundering through the physical (and virtual) halls of government.

Let’s start with a quick recap about the debt ceiling and how it could cause a crisis. The U.S. Treasury draws on banking accounts at the Federal Reserve to fund federal governmental activities—remitting paychecks to federal government employees, sending Social Security checks to beneficiaries, reimbursing doctors for treating Medicare-covered patients, paying defense contractors and interest to bondholders, and so on. These accounts are fed on an ongoing basis by both tax revenues and the proceeds from selling bonds (debt). But because the United States has a statutorily imposed limit of how much outstanding debt is allowed, in theory the debt ceiling means that when it’s hit that Treasury would no longer be allowed to sell bonds and deposit these proceeds. In this scenario, accounts at the Federal Reserve would dwindle as they are now only fed by ongoing taxes, which are insufficient to cover all spending. It’s worth noting that this would be such a disastrous outcome that policymakers should feel obligated to engage in any possible workaround.

The U.S. is currently running a federal budget deficit of just over 6% of gross domestic product (GDP). If the debt ceiling was allowed to bind spending at levels that could be financed only by taxes, federal spending would have to be cut instantly by over $1.5 trillion (on an annualized basis—equal to roughly $130 billion per month). This $1.5 trillion is people’s incomes throughout the economy (whether they are federal employees or contractors or Social Security recipients or doctors and hospitals reimbursed by federal health programs). As incomes were slashed, these households would pull back on spending. Businesses losing customers would pull back investment. A vicious spiral leading to recession would begin with shocking speed.

Further, throughout U.S. economic history the downward spirals of economic crises were ended entirely because the federal government’s taxes and spending have acted as “automatic stabilizers”—taxes fell and spending rose as unemployment soared and the economy entered recession. But in a crisis driven by the debt ceiling, as taxes fall spending would have to fall further. Instead of acting as an automatic stabilizer, the federal government would act as a crisis amplifier.

This extremely grim set of totally predictable outcomes is why we’re so strident that the debt ceiling should be abolished. It serves no useful purpose and only provides a means through which extremists in Congress can do profound damage to working people. It also needs to be raised soon to avoid this kind of potential crisis.

But for now, another threat of political zealots and the crises they could cause looms even larger.

Elon Musk’s recent spate of illegal impoundments and firings can be seen as an attempt to mimic what a debt ceiling crisis would look like. Instead of spending being bound by a legal bar against issuing new debt, spending is currently being bound by the whims of a billionaire who bullied his way into accessing the Treasury accounts that distribute spending where it is legally obligated to go and shutting it down. But in terms of pushing the economy closer to crisis, how spending is suddenly constricted is less important than the result—sharp spending reductions can throttle economic activity and push the economy closer to recession and crisis. And because these spending reductions would only relent or reverse at the whim of Musk’s team, the automatic stabilizer function of the federal government could not be relied upon to kick into gear.

At this point, the illegal impoundments have not added up to a scale that would be comparable to a debt ceiling scenario, but, again, this is entirely because the Musk team has so far decided to not impound that much spending. If they decide that it would be fun to impound more and cause a crisis, what’s to stop them? Having one person in charge of whether or not the U.S. government actually spends the money that’s been legally obligated by Congress is not just a democratic disaster, it is absolutely a recipe for economic crisis.

To date, the real damage done by the illegal impoundments and firings is the valuable work of federal employees that is not being performed and the hollowing out of key state capacity. Our federal workforce was too small and too poorly paid even before the Trump administration allowed Musk’s teams to start arbitrarily hacking at it. Further constricting it will lead to a profoundly less functional government—and that matters a lot to people’s lives, cheap cynicism aside. But if the DOGE team isn’t stopped, their cuts won’t just sap the long-run productivity of the economy, it could easily cause a full-blown crisis in the near term.

In the first month of his new administration, President Trump has taken drastic steps to reduce the size of the federal workforce, from offering nearly all federal employees a “deferred resignation” buyout to illegally firing senior officials at several agencies. While many of these efforts are being challenged in court, the strategy behind them is clear: Villainize public servants, fire or push them out of their jobs, and then dismantle the federal services they were faithfully executing. By sowing public distrust in those who provide government services, the public’s faith in the goods provided by the government is at risk of eroding too, making it easier for the administration to eliminate core government functions that hundreds of millions of Americans rely on.

The public goods provided by federal agencies are so commonplace that we may not even recognize how prevalent they are in our lives. When we walk into the grocery store, we purchase our food knowing that it won’t make us sick because of the efforts of the Food and Drug Administration. When we travel in a car, we have confidence in reaching our destination safely because of the standards set and enforced by the Department of Transportation. We can evacuate areas in advance of life-threatening natural disasters because of the efforts of the National Weather Service and other federal agencies. These and countless other services provided by the federal government are possible because of the dedication and expertise of federal employees who are now under attack.

The impact of these attacks will be felt throughout the country. Every congressional district has federal workers. Below, we provide a snapshot from FedScope of the federal workforce and the actions the Trump administration has taken to undermine them.

Who are federal workers?

The federal workforce consists of roughly 3 million employees and represents the diversity of the country (see Tables 1 and 2). Individuals holding these jobs are hired and discharged based on their merit and are protected from undue political influence or reprisal. The last time Congress made comprehensive reforms to the civil service system was in 1978, following the Watergate era of abuse of powers, overt politicalization of the civil service system, and increased distrust in government. In many ways, the civil service system was designed with the express purpose of guarding against the very objectives the current administration seems to be pursuing.

Table 1 Table 2

While a significant focus has been on agencies headquartered in Washington, D.C., the vast majority of federal employees (93%) live and work outside of the nation’s capital (see Table 3).

Table 3

Nearly 50% of federal employees have been in federal service for more than a decade, acquiring deep expertise and knowledge. Tables 4 and 5 below highlight the educational attainment of the federal workforce and the top 10 most common occupational categories, accounting for more than 70% of all employees. 

Table 4 Table 5 Trump administration’s attacks on the federal workforce

The Trump administration has moved at a rapid pace to cut the federal workforce. Among others, these actions include:  

• Issuing a Schedule F executive order to make it easier to fire federal workers in jobs that are normally apolitical.
• Issuing an executive order that eliminates telework and remote work options for federal employees.
• Issuing an executive order that places a freeze on all hiring of federal civilian employees.
• Placing employees in Diversity, Equity, Inclusion, and Accessibility offices on administrative leave.
• Requiring all agencies to identify and review retention needs of all probationary federal employees and firing those workers at several agencies.
• Sending a mass email to all federal employees providing them with a “deferred resignation” option.
• Firing or ordering to retire senior officials at a number of agencies, including the Equal Employment Opportunity Commission (EEOC), National Labor Relations Board (NLRB), FBI, U.S. Coast Guard, and others.
• Firing Inspectors General at 17 agencies.
• Placing U.S. Agency for International Development (USAID) employees on indefinite administrative leave, firing contract workers, and recalling employees who are abroad.
• Revoking an executive order that protected the collective bargaining rights of federal workers.
• Revoking an executive order that protected workers’ job security on federal service contracts.

In the coming weeks and months, we will no doubt continue to see more attacks on the federal workforce. You can find a comprehensive catalogue of all policies relevant to working people and the economy at Federal Policy Watch, an EPI online tool documenting actions by the Trump administration, Congress, federal agencies, and the courts. You can subscribe to daily Federal Policy Watch updates here.

The clearest legislative priority of the Trump administration and the Republican-led Congress is to keep taxes low for the richest households and corporations. Last week, House Republicans submitted a budget resolution that calls for $880 billion in cuts to Medicaid—the program that provides health insurance for low-income Americans—to help pay for extending the 2017 Tax Cuts and Jobs Act (TCJA), which primarily benefits the highest earners. President Trump endorsed the House plan earlier this morning, despite vowing yesterday to not cut Medicaid.

Besides being unfair, the cost of this overall tax cut would be large enough to put huge stress on other parts of the economy, no matter how it is paid for. But the costliest way to pay for this would be to enact large cuts in spending programs like Medicaid that provide benefits to economically vulnerable families. These cuts would equal almost 11% of all Medicaid spending over the proposed time period.

In a forthcoming report, we highlight just how damaging these Medicaid cuts would be for typical families. Health coverage is expensive in the U.S., and the value of Medicaid’s coverage is equal to a huge share of the total income of poorer families. In fact, a family health insurance plan in private markets can cost more than what the bottom 20% of families earns in an entire year.

Figure 1 below shows the House budget resolution’s average cut to Medicaid benefits for the bottom 40% of the income distribution, expressed as a share of average income. It also shows how much extending the TCJA’s expiring provisions would boost incomes for these groups and the top 1%. The upshot is that the bottom 40% would be unequivocally worse off: Proposed cuts to Medicaid would reduce incomes for the bottom 40% more than extending the TCJA would boost them—and the lowest-income households would fare the worst. Strikingly, this is true even as the full $880 billion in Medicaid cuts would only pay for about 20% of the total cost of the TCJA—other cuts and economic damage falling on non-rich families stemming from tax cuts for the rich would still be forthcoming. Meanwhile, the TCJA boosts the incomes of the top 1% significantly, while these households do not rely in any way on Medicaid.

Figure 1

A table from our forthcoming report is reproduced below—it shows the cuts to Medicaid expressed as a share of total money income for the bottom 40% of the income distribution for each state. States with more generous Medicaid coverage will see larger cuts, while states that have been stingier to date with Medicaid will see smaller cuts. But in every single state, the proposed cuts are a disaster for the incomes of the bottom 40%. This policy trade-off of thousands of dollars in cuts for the bottom 40% in exchange for tens or even hundreds of thousands of dollars in tax cuts for rich families crystallizes the Republican priorities.

Table 1

Reparations for Black Americans—whether for chattel slavery at the federal level or more local forms of redress for past harm at the state and municipal levels—have long been dismissed as unrealistic and unattainable from a policy perspective. Broad public support for reparations policies has consistently remained shy of a majority nationally, even at the height of the Black Lives Matter movement in 2020, when mass protests and awareness campaigns highlighted the history of harm and injustice done against Black people in the United States. While most Black Americans support reparations, the majority of white, Hispanic, and Asian Americans surveyed do not.

The incoming presidential administration has been hostile toward efforts to promote equity through government. On day one of the administration, President Trump rescinded all previous executive orders related to diversity, equity, and inclusion, and introduced new executive orders to explicitly preclude future federal efforts pursuing equity. Rhetorically, the administration and its supporters have resisted any consideration of racial equity, even by private institutions.

In an environment where pursuing equity goals could invite dangerous scrutiny, one could reasonably ask: Is it still prudent to talk about reparations in 2025? Or would our time be better spent defending the rights we have and aiming for more attainable goals, rather than straining toward something seemingly further beyond our reach than even a few years ago?

Reparations represent a commitment to acknowledge and apologize for the harm done in the past; to provide material redress for that harm; and to making the structural changes necessary to prevent that harm from reoccurring. Each of these commitments are critical to counterbalance this administration and its supporters’ efforts to deceptively erase the role of race and racism in the economic story of our country. As we face threats of fascism and the glorification of the nation’s sordid history of white supremacy, continuing the push toward reparations reinforces commitments to righting the wrongs of the past and fighting for a more equitable future.

The state of reparations in 2024: The bottom line? The work continues. 

While the prospects for reparations at the federal level seem bleaker than ever under a second Trump administration, this work continues at state and local levels. State and local reparations efforts can never substitute for a full-fledged federal reparations program, especially as it relates to redress for chattel slavery, Jim Crow, and mass incarceration at the federal level. However, state and local reparations plans that acknowledge and apologize for harm done and provide material redress for that harm can arguably still be reparative if they meet the following additional criteria: 

• They specify correctly what harms are being addressed and who should benefit; 

• They stay within their capacity to provide redress for the identified harm while avoiding absolving the federal government from its own responsibility; 

• They make a commitment to structural change designed to prevent future racial injustice. 

As of December 2024, at least 40 localities have established reparations initiatives: seven states, four counties, and 30 city-level reparations task forces or commissions. The activities undertaken include reports, policy recommendations (e.g., community development, asset restoration, addressing systemic gaps, etc.), and in some cases disbursement of funds. These plans have not all met the necessary criteria to be considered truly reparative in the context of injustices committed against Black Americans, but they are nevertheless indicative of some movement toward providing redress for past harm. Table 1 lists a subset of state and local initiatives either passed or advanced in 2024, along with whether and how effectively they meet each of the five criteria outlined to make a state or local plan reparative.

Table 1

Each plan is uniquely designed to investigate and address a location-specific historical harm. The shape of each plan is also affected by the political context of its locality. Ultimately, the fact that these plans are being actively developed and considered, even in the face of mounting pressure and opposition at the federal level, is a testament to the architects’ commitment to equity and perseverance. 

What are the political headwinds facing reparations efforts in 2025?  Anti-equity sentiment in the courts and challenges to reparations initiatives 

Hostility toward equity initiatives has been bubbling up in the courts for years, particularly with respect to the anti-affirmative action cases filed against prominent private and public universities, culminating in the 2023 Supreme Court ruling that effectively ended the practice nationwide. Affirmative action policies were implemented to address the biases against underrepresented groups across institutions. The result of removing affirmative action policies from universities has invariably been the shrinking number of otherwise qualified Black and brown students attending these institutions. Scholars have noted that the absence of affirmative action does not result in a system of pure meritocracy, as is so often claimed. Rather, it reverts the U.S. to a system that unjustly privileges white (especially male) mediocrity.

Legal challenges have been targeted at state and local reparations initiatives as well. In 2024, Oklahoma’s Supreme Court dismissed a lawsuit seeking reparations for the two survivors of the 1921 Tulsa Race Massacre. One of the few active local reparations plans in Evanston, IL, is also facing a lawsuit from a conservative group, claiming that the program’s focus on race in its implementation renders it unconstitutional. These lawsuits pose an existential threat to reparations initiatives nationwide. If they are going to be reparative, then they must explicitly consider race because this is what historically determined who experienced the harm for which redress is being sought.

Anti-equity sentiment in corporations: DEI rollbacks 

Several large private companies have rolled back their commitments to diversity, equity, and inclusion in the months since Donald Trump won the 2024 presidential election. These are some of the largest and most influential companies in the country, including: Amazon, Boeing, Ford, McDonald’s, Meta, Wal-Mart, and more. In many cases, these policies are being rolled back well before they could have begun to have their intended effect of changing the makeup of the companies’ executive and senior leadership teams.

These large and influential companies walking back their previous commitments to advancing equity contributes to a chilling effect around equity initiatives, making it less likely that awareness and support for the pursuit of equity goals grow among the public. They also represent a transparent effort to curry favor among a resurgent “America First” white supremacist political movement. This pushes bold racial and economic justice strategies like reparations further outside the realm of feasibility for many.

Anti-equity sentiment in the federal government: Trump administration action and rhetoric 

The Trump administration has been explicitly hostile toward DEI within the federal government. Any consideration of race, ethnicity, sex, or sexual orientation in hiring or the impact of federal policies and programs has been condemned or completely removed from the federal government’s agenda. This assault on equity was telegraphed constantly throughout the Trump-Vance presidential campaign and the administration acted on that promise immediately upon assuming office.

With any consideration of racial equity precluded in the federal government, the possibility for movement on federal reparations is essentially nil for the time being. Acknowledgement and apology, material redress, and commitment to structural change going forward are all non-starters for an administration that rejects the basic reality that racial disparities exist and require action to eliminate.

Why is it important that we continue to support reparations efforts in 2025?  Reaching consensus on the importance of reparations would build solidarity and Black worker power 

Leaving our history of racial injustice unaddressed makes it difficult to build the cross-racial solidarity necessary to support a strong labor movement. A precondition for unifying groups from different backgrounds in a common struggle is mutual acknowledgment of their separate struggles as important and worthy of redress. This is why strategies such as the braided narrative have worked for raising awareness and support of both reparations for chattel slavery and land back movements for Black Americans and Indigenous Americans. Enthusiastically supporting the movement for racial justice, including reparations initiatives, is a clear way labor advocates can show solidarity and promote a multiracial progressive movement for labor rights and economic justice.

On a more concrete level, material redress for the history of economic exploitation and exclusion Black families have faced in the U.S. could move more families away from the precarity that enables economic oppression. People are much easier to exploit when they are struggling to make ends meet. However, this has not stopped Black workers from often taking the lead in labor organizing when pushed by harsh or discriminatory conditions. Closing the racial wealth gap would strengthen the economic fallback position of more Black workers, allowing them to participate in bargaining on more even footing relative to their white counterparts, from a position of security rather than precarity. 

Reparations for chattel slavery at the federal level, aimed at addressing the history of economic exploitation and exclusion Black families have faced in this country, is likely the only effective path for meaningfully closing the racial wealth gap in the United States. Given that movement at the federal level on reparations has stopped, the best way to continue to build the momentum necessary to achieve this is to support the state and local efforts happening across the country. 

We cannot afford to lose track on the progress we’ve made since 2020 

We have made significant progress in building public understanding and awareness of reparations initiatives nationwide, even if we are not yet at a place where most of the country approves of these plans. The major development since 2020 has been an advance from reparations being a mere pipe dream, to initiatives and investigations into specific harm inflicted by state and local governments against their citizens being carried out. In the past year, we witnessed a historic win for former residents of Section 14 in Palm Springs, CA, who were violently displaced by the city during the 1950s and 1960s. Additionally, seven localities either established new reparations task forces or pledged funding for a reparations task force in their 2025 budget. More than 10 localities have been actively meeting and a handful are scheduled to release their final research and recommendations this year. It’s imperative that we maintain our focus on these initiatives as headwinds strengthen. This momentum took decades to build and the spark of 2020’s protests to ignite. We can’t allow a hostile administration to snuff out this movement just as it has begun to glow.

Reparations is our North Star for equity, providing a counterweight against a backslide into white supremacy 

The current political moment is one of growing uncertainty and fear, particularly for marginalized people. At the highest levels of government, decisions are being made that deprioritize the rights of people of color, along with women, LGBTQI+ people, and the materially disadvantaged of all races. Fixing our eyes on rectifying our greatest historical wrongs and committing to preventing those atrocities and injustices from ever happening again grounds us in hopeful possibility. The alternative is to succumb to despair in the face of reversed progress and encroaching bigotry. Hope is necessary for the progressive movement to persist in the fight for equity and justice.

This piece was originally published at In These Times. 

Less than a month into his second term, President Trump has undertaken dozens of actions that harm workers, the economy, and our democracy. If it feels like déjà vu, it is. Many of these actions were introduced during his first term, when President Trump attacked unions, workers’ wages, and workplace health and safety. But now, equipped with policies from the Heritage Foundation’s far-right Project 2025, Trump is going even further to prioritize the interests of corporations and billionaires like Elon Musk over working people. 

On day one, President Trump issued several executive orders that impact the federal workforce. This included reinstating Schedule F, which upends longstanding job protections for federal career employees and makes it easier to fire them for any reason. He also overturned federal collective bargaining and affirmed due process protections, instituted a federal hiring freeze, and mandated federal workers return to in-person work five days a week. 

President Trump also created the Department of Government Efficiency (DOGE), headed by tech billionaire Elon Musk, to help ​“reduce wasteful spending” in the federal government. Under the guise of budget reductions, DOGE has demoralized and villainized the more than two million federal workers—nearly 30% of whom are union workers—who provide essential government services. 

Two weeks ago, In These Times broke the news that Elon Musk and DOGE are targeting the Department of Labor and accessing sensitive worker data. (EPI and our labor partners filed a lawsuit against DOGE from gaining access to this vital government data.) Earlier this month, DOGE gained access to systems at the U.S. Treasury Department, including access to the disbursement of vital programs such as Social Security and Medicare, with the intention to undemocratically cut already appropriated funds for federal programs that the Trump administration doesn’t like. While the Trump administration has clarified that Musk receives ​“read only” access, it’s deeply troubling that an unelected billionaire has any access to such information— especially when that anti-union CEO has received multiple allegations of breaking federal employment laws. 

President Trump has also paralyzed worker protection agencies by firing key officials from the Equal Employment Opportunity Commission (EEOC) and the National Labor Relations Board (NLRB). The firing of two EEOC Commissioners and a NLRB board member is unprecedented—none have been fired before in the history of either agency. Further, as positions within independent federal agencies, they are intended to be shielded from presidential interference once confirmed by the Senate. These illegal firings have made it so neither agency has a quorum to hear cases or issue decisions, stifling their ability to effectively operate.

The impact of firing a board member at the NLRB is significant. President Trump has not only robbed U.S. workers of their ability to enforce their right to a union and collective bargaining, he has also destroyed the independence of the agency. By firing NLRB Board Member Gwynne Wilcox for ​“unduly disfavoring employers,” Trump has made it clear that he expects the NLRB to rule on the side of employers. 

The move, while unprecedented, should not be shocking. Consider that SpaceX, owned by Elon Musk, has challenged the constitutionality of the NLRB in order to suppress efforts by workers in his company to unionize. While those lawsuits continue, President Trump has delivered an immediate victory to Musk by ensuring the NLRB will not be able to enforce workers’ rights to a union, including those at Tesla and SpaceX. 

President Trump has started his second term the same way he finished his first—putting the interests of corporations and billionaires over those of working people. Legal action is now being pursued to push back against the Trump administration’s most egregious actions that negatively impact working people and families. However, President Trump and Congressional Republicans are set to continue this campaign of harm, having floated spending cuts to vital safety net programs to pay for tax cuts for the wealthy in the upcoming budget negotiations. In the fight between workers and billionaires, it’s clear which side President Trump has chosen.