If the United States does not raise the debt ceiling for installment loans and cannot pay its bills, millions of Americans could feel the effects. Social Security checks, veterans benefits, child tax credit payments and more could be frozen.
“Anything that the government spends money on could be earmarked,” said Paul N. Van de Water of the Center on Budget and Policy Priorities.
The US Treasury still brings in tax revenue, but that’s not enough to cover what it owes – it has to borrow to make up the difference. The department estimates that its ability to pay all the bills will be exhausted if Congress does not decide to increase or suspend the debt ceiling by October 18.
At this point, several different scenarios could arise. The treasury faces more than $ 75 billion in payments for social security, medicare, tax refunds and wages from Oct. 18 to the end of the month.
Some members of Congress have called for prioritizing certain types of payments, starting with principal and interest on public debt, followed by Social Security payments, military balances and veterans benefits. But the feasibility of carrying out such a plan remains in question and there is the potential for legal challenges.
“We really have no idea because we’ve never been there before, and we can’t try to illustrate what it might look like if the Treasury got to a point where it wasn’t able to. make all of their payments in full and on time, ”said Shai Akabas of the Bipartisan Policy Center.
As lawmakers battle over who is responsible for tackling the debt ceiling, here’s what’s at stake:
Social Security payments: October 20 and 27
On 65 million Americans receive Social Security benefits each month, including 46 million retired workers, each receiving more than $ 1,500 a month, and more than 8 million disabled workers, each receiving more than $ 1,200 a month. Some $ 90 billion in payments are expected to be made within a month.
Millions of Americans are expected to receive benefits on the third or fourth Wednesday of the month – October 20 and 27 – just days after the United States could default.
Even a short delay would cause financial hardship for many. Forty percent of social security recipients rely on the benefit for more than 90% of their income, and for two-thirds of them it accounts for almost half.
“Yes, they can be paid in a few weeks or a few months – whenever that is resolved – but that doesn’t solve the problem of making decisions like ‘am I going to buy my meds, am I going to pay my rent, am I going to pay my rent? I buy food, will I pay for my utilities? ‘ Because these things are not going to wait, ”said Max Richtman, president and CEO of the National Committee for the Preservation of Social Security and Medicare. “It would put serious financial pressure on many, if not most, social security recipients if they are not paid in full on time.”
Child Tax Credit Payments: October 15
Some 35 million families with 60 million children have received monthly child tax credit payments on or around the 15th of each month since July.
If the US government hits date X on October 15, slightly earlier than the Treasury estimate, it could cause a delay in the release of the fourth tranche.
Payments are $ 300 per child under six and $ 250 for children six to 17. Political experts have attributed the monthly child tax credit payments to helping reduce child poverty rates in the United States by almost half.
Veterans Benefits: November 1
The country’s veterans enjoy a number of different monthly benefits that range from disability compensation and pensions to survivor benefits. If the U.S. government defaults on Oct. 15, payments scheduled for Nov. 1 could be delayed for those who served and their families. At the same time, the expected active military balances could also be delayed.
Federal wages: October 15 and 29
There are over 2 million people in the federal workforce. If the government cannot pay its debts, their wages could also be at risk. Since federal employees are paid bi-weekly, the government could struggle to make payroll at the end of October if the government defaults.
More than 80 million people are registered to receive benefits from Medicaid or the children’s health insurance program. While states administer Medicaid programs, they come to the federal government for reimbursement on an ongoing basis. If the federal government cannot make these payments, it could lead to a domino effect where states cannot make payments to health care providers or providers.
More than 42 million people participate in the supplementary nutritional assistance program, commonly known as SNAP. The average benefit is just over $ 200 per person or over $ 400 per household, according to data from the Department of Agriculture. If the United States defaults on debt, payments could be delayed by weeks or even months, delaying helping millions of families in the world’s largest anti-corruption program. hunger of the country.
However, a US default would not only affect people who receive federal benefits or wages. If interest rates on treasury bills were to rise, it would affect rates on auto loans, home loans, credit cards and the cost of other borrowing, the Committee for a Responsible Federal Budget said.