Nevada treasurer calls the U.S. debt impasse a disturbing 'manufactured crisis'

Transcript

A MARTÍNEZ, HOST:

The U.S. Treasury says it's using extraordinary measures to avoid defaulting on the country's debt. However, the Treasury secretary says the federal government could run out of cash by June 1. If President Biden and Congress fail to come to terms over the debt ceiling, some state officials worry their budgets and the residents will feel the pain. Henry Beck is the state treasurer of Maine.

HENRY BECK: There would be less money in the bank for everybody. That would tighten credit and increase prices in an already very difficult environment. That could affect credit card rates, mortgages, auto loans.

MARTÍNEZ: To hear about the effects on another state, we turn to the state treasurer of Nevada, Zach Conine. Treasurer, you just heard your main counterpart. How true does that ring for you in Nevada?

ZACH CONINE: Treasurer Beck has it absolutely right. Here in Nevada, we are so very concerned that if Congress doesn't get this right, that the impacts are going to be felt in the state for a long time. And we're just coming out of an incredibly difficult time for Nevada. And we've had a great recovery. But this threatens to put it all at risk.

MARTÍNEZ: And the threat of default, is that enough to change things?

CONINE: You know, we're already seeing it. A little bit of threat of default changes people's behavior. It changes just the general concept that Nevadans and Americans have of their government, right? Full faith and credit should be a promise that we don't need to wake up in the middle of the night thinking about. But that's happening quite a bit out here.

MARTÍNEZ: Now, economists say default could tip the U.S. into a full-blown recession. What happens to a state like Nevada with a high unemployment rate?

CONINE: Well, what we always say is that when the rest of the country gets the sniffles, Nevada gets the flu. And that's absolutely going to be the case. We still have an economy that is very, very dependent on travel and tourism. And so if we see protracted job losses, when we see major declines in the market, we see losses right here in Las Vegas, we see losses around the state. People just don't come as much. And that would be an absolutely insane thing to have happen just so that we can play some political games.

MARTÍNEZ: That could be just the ragweed in Las Vegas, Treasurer. You know, that happens once in a while. Will you cut spending as a result of just this threat or if it happens?

CONINE: Well, at some point, if we start seeing decreases in revenue, we'll have to cut spending. But right now Nevada's dealing with a very, very good economic situation coming out of the pandemic. We have record revenues. We have more money in the rainy-day fund than we've ever had. We're certainly ready, if we need to, to deal with a little bit of a downturn. But I think it's important for us to focus on the cause here, right? And it's one thing to deal with a global pandemic and to make the hard decisions that Nevadans had to make during that. But to deal with a manufactured crisis is, frankly, just a little disturbing to us.

MARTÍNEZ: Well, I know, Treasurer, you've proposed a couple of bills based on Nevada's current all-time best credit rating. And that rainy-day fund that you mentioned - one of them has to do with a trust fund for babies whose birth was covered by Medicaid. The other is a student loan repayment program that would include health care workers who work in underserved communities for at least five years. What happens to those bills if the federal government defaults?

CONINE: Well, we don't think that Nevadans should stop doing the work to protect and enhance opportunities for Nevadans, right? And so those bills are really important. We've got to solve our medical provider crisis here. We've got to make sure that we provide a path to get Nevadans out of generational poverty. We're going to keep doing that work. If there's a downturn in the future, we'll deal with it when it comes. But we're not going to stop fighting for Nevadans just because of something happening across the country.

MARTÍNEZ: But what, if anything, is the state preparing for just in case? I mean, is it even possible to prepare considering the uncertainty?

CONINE: It is. And we start thinking about things like having more cash in the bank. When there has been - when there have been shutdowns in the federal government before, sometimes the state has to lay out money in order to make sure that we're ready to pay whatever those bills are that typically would be paid for by the federal government. Our concern this time is we just don't know that we can count on them to pay their bills when they come due to the state.

MARTÍNEZ: That's Nevada state treasurer Zach Conine.

Treasurer, thanks.

CONINE: Thank you. Transcript provided by NPR, Copyright NPR.