That’s because unless Congress suspends or raises the debt limit in coming weeks, the federal government will no longer be able to borrow to pay for its operations, forcing it to limit its spending.
Just what it would mean for Americans remains uncertain since Congress has always stepped in to raise, extend or revise the definition of the debt limit in the past.
These benefits might be affected
The Treasury Department could still pay some of its bills since it would still have tax revenue coming in, but it’s not known what it would decide to pay and when, experts said.
“Just about everyone is likely to be affected in some way or another,” said Paul Van de Water, senior fellow at the left-leaning Center on Budget and Policy Priorities.
Among them would be Social Security beneficiaries, who would be at risk for not receiving their payments for the first time since the program was created in 1935, said Max Richtman, CEO of the National Committee to Preserve Social Security and Medicare. They are scheduled to receive $90 billion in payments in October.
Some 40% of beneficiaries depend on the monthly checks for at least 90% of their income, and two-thirds of recipients depend on the infusions for at least half of their income, he said.
“Not having a check for a few weeks or a month is devastating,” Richtman said. “Beneficiaries are going to have to decide: Do I pay my rent? Do I buy food? Do I buy my medicine?”
Meanwhile, more than 42.3 million Americans who receive food stamps could be left waiting for their monthly benefits — an average of $227 per person.
What the White House says
The White House last week laid out the consequences of a default, listing six key areas where federal funding to state and local governments could be delayed.
- Tens of billions of dollars in annual disaster relief assistance to states and localities dealing with wildfires, floods and other natural catastrophes.
- More than half a trillion dollars for Medicaid and the Children’s Health Insurance Program, which cover 1 in 5 Americans.
- More than $30 billion for nutrition assistance for children’s school meals, which serve 30 million kids, as well as the Women’s Infants and Children (WIC) program and the Supplemental Nutrition Assistance Program, or SNAP, as food stamps are formally known.
- About $100 billion in infrastructure funds for transit, highway and airport projects.
- More than $50 billion in education money for Head Start, special education and other school programs.
- More than $10 billion for public health programs.
Other Americans could also be affected, Van de Water said. Military service members might not receive their paychecks on time, and about 6 million veterans and their survivors could see their benefits paused.
“Virtually every payment could face some sort of delay or reduction,” he said.
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