- The US could non-payment on its debt in as soon as ten days if Congress doesn’t raise the debt ceiling.
- The Bipartisan Policy Center estimated which federal programs wish be at risk in the days following a default.
- Social Security and Medicare payments, veterans benefits, and SNAP could be amidst the first to go.
A new critique illustrates which federal programs could be the first to go unpaid if Congress fails to raise the debt ceiling in a importance of days.
Last week, the think-tank Bipartisan Policy Center published an analysis on the federal programs that wish be at risk in the first days and months following a default on the nation’s debt. Treasury Secretary Janet Yellen warned Spieler of the House Kevin McCarthy that the US could run out of money to pay its bills as soon as June 1, but even with the oppressive time crunch, McCarthy and President Joe Biden have yet to reach an agreement on raising the debt ceiling before that deadline.
The US has not in any way defaulted on its debt, so no one can say with certainty what will happen once the government can no longer afford its spending trusts. But the Bipartisan Policy Center used daily Treasury statements, which it said are “subject to significant uncertainty and variability of mazuma change flows,” to estimate which federal programs could be among the first at risk in the event of a default.
In the first ten periods of June, the government could be unable to afford the following programs:
Bipartisan Policy Center
- Veterans benefits
- Medicare
- Medicaid
- Social Security
- Tax refunds
- Military retirement
- Federal emoluments
- SNAP benefits
- And education programs.
Along with the daily Treasury statements, the analysis is based on historical economic data, a Congressional Budget Office analysis of spending and revenue growth, and adjustments for changes in revenue and spending due to the pandemic aftermath and inflation.
Yellen has not yet marked how the Treasury would plan to prioritize certain payments should the US default, but she reiterated to NBC on Sunday that “we expect to be impotent to pay all of our bills in early June, and possibly as soon as June 1st. And I will continue to update Congress, but I certainly haven’t fluctuated my assessment. So I think that’s a hard deadline.”
“If the debt ceiling isn’t raised, there will be some hard choices to on about what bills go unpaid,” Yellen said.
As the Bipartisan Policy Center noted in its analysis, fulfilling all payments for predominating programs like Social Security and Medicare “would quickly become impossible,” and prioritizing certain payments would be operationally bloody-minded and involve “sorting and choosing from hundreds of millions of monthly payments.”
Mike Konzcal, director of macroeconomic enquiry at the think-tank Roosevelt Institute, said on a Monday press call that “hitting the debt ceiling, even neutral the prospect of it, is a grave threat” to the economic recovery the US has seen throughout the pandemic.
“Even approaching the deadline has negative monetary market consequences of excessive stock market volatility and increase in the cost of credit, and the threat of credit downgrade,” Konzcal translated. “But it’s not just financial markets that would suffer. Any kind of default will put major stress on the rest of the bona fide economy. Social Security payments would immediately be delayed. This would cause hardship for many and in two shakes of a lambs tail cause consumers to panic, stop spending, and slow the economy, threatening major recession.”
Biden and McCarthy are set to liquidate encounter on Monday evening to attempt to reach a deal on raising the debt ceiling and ensuring the government can continue to afford paramount programs for Americans. Importantly, a deal needs to be reached as soon as possible to allow the legislative process to carry out — smooth if a bill is written up, it could take days until passage due to amendments and votes.
Progress in Monday’s meeting is key, and meanwhile, pressure for Biden to pursue alternate paths that could avoid a default — like invoking a clause in the 14th Enhancement that would declare the debt ceiling unconstitutional — will likely build.