Time is dwindling for lawmakers to raise the debt ceiling before the country runs out of money to pay its bills − something that has never happened before but could happen this year as early as June 1.
President Joe Biden met with top congressional leaders Tuesday to discuss an impending, first-of-its-kind default as debt ceiling brinkmanship continues in Washington. Because the country has never defaulted on its obligations, it is unclear how deeply it would affect the U.S. economy.
Consequences could include “defaulting on interest payments that are due on the debt or payments due for Social Security recipients or to Medicare providers,” Treasury Secretary Janet Yellen said on ABC’s “This Week.”
“We would simply not have enough cash to meet all of our obligations. And it’s widely agreed that financial and economic chaos would ensue,” she said.
Here’s what it could mean for you:
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Social Security, Medicare, federal salaries at risk if U.S. defaults
The Treasury department makes millions of payments a day, all of which would be in jeopardy if the government runs out of money.
“The most direct effect is that some people who are owed money from the federal government may not get paid,” Shai Akabas, director of economic policy at the Bipartisan Policy Center, told USA TODAY. Those payments include Social Security, Medicare, Medicaid, federal salaries, food stamps and more.
The Treasury could have to prioritize or delay certain payments but considering a default would be uncharted territory, Akabas said it is difficult for the Treasury to pick and choose which payments to make because so many families rely on the government’s various payments.
“These are of course important programs that many American households rely upon,” Akabas said. “In a world where some of those payments are not arriving on time, it is clearly going to cause disruption for many household budgets.”
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