This post was originally published on this site
Like a married couple on the brink of divorce, Republican and Democratic lawmakers are in the midst of yet another ugly fight — this time over whether to increase the amount of debt the U.S. government can take on.
But unlike the typical marital fight, millions of Americans’ livelihoods are depending upon the two parties to reconcile.
The current debt limit is set at $28.4 trillion but the amount of debt the government has taken on hovers slightly above that at $28.43 trillion, according to the Peter G. Peterson Foundation’s live tracker.
Treasury Secretary Janet Yellen warned on Tuesday that the U.S. economy would fall into another recession if lawmakers don’t increase the debt ceiling by Oct. 18 — at which point the federal government will have no access to outside funding.
But Republicans have conveyed that raising the debt limit would be akin to giving Democratic lawmakers a blank check to pass trillion-dollar progressive policies.
On Wednesday Republican Senate Minority Leader Mitch McConnell raised the possibility of voting on a short-term debt limit extension in a closed-door meeting with Senate Republicans.
If lawmakers don’t act, “the Treasury will have to do something unprecedented” such as make untimely spending cuts if the debt limit isn’t raised, said Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a nonpartisan think-tank.
That will leave the Treasury “between rock and a hard place,” Van de Water said.
It would fall on Treasury and White House officials to determine the legal guidance on which of the governments’ bills — if any — could be paid, and in which order, said Mark W. Everson, a former IRS Commissioner.
Here is what’s hanging on the line for Americans if lawmakers fail to raise the debt ceiling in time:
Social Security payments
Even though Social Security payments that go out to some 65 million Americans are financed primarily through payroll taxes and trust funds, it’s not enough to cover the $1,555 average monthly benefit for retirees and $1,280 average monthly benefit for disabled people, Van de Water said.
“Retirees receive $1,555 a month on average in Social Security benefits while disabled people receive $1,280 a month on average ”
“Even a short delay in the payment of Social Security benefits would be a burden for the millions of Americans who rely on their earned benefits to pay for out-of-pocket health care expenses, food, rent and utilities,” the National Committee to Preserve Social Security and Medicare, a liberal-leaning advocacy group, said in an online post.
The Social Security Administration did not respond to MarketWatch’s request for comment regarding the potential impact on Social Security beneficiaries.
Access to medical care through Medicare and Medicaid
More than 60 million Americans receive health insurance coverage through Medicare and some 75 million are enrolled in Medicaid, according to estimates published by the Kaiser Family Foundation, a nonprofit health advocacy group.
“More than 60 million Americans receive health insurance coverage through Medicare and some 75 million are enrolled in Medicaid”
If lawmakers don’t raise the debt limit and inaction persists over weeks or months, “patients could lose access to medical care as doctors struggled to cope with delayed Medicaid and Medicare reimbursements,” Whitney Tucker, the deputy director of research on the State Fiscal Policy team at CBPP, said in a recent note.
Tax refunds and child tax credits
On Wednesday, Yellen said “every family receiving a child tax credit” would be impacted by a potential failure to raise the debt limit in time. Like some Social Security recipients, low-income parents receiving the monthly payments of up to $300 per child might have to choose between rent or groceries without it.
“The IRS’ September round of child tax credit payments totaled approximately $15 billion, going to around 35 million families”
Judging by what Yellen said Wednesday, people waiting for the child tax credit payments and tax refunds would have to keep waiting, Everson, now vice chairman at alliantgroup, a tax consulting firm, told MarketWatch.
“The secretary has drawn a very bright line. She is not leaving wiggle room to pay,” Everson said. And that prospect “would be an abrupt and difficult change of circumstances for millions.”
The IRS’ September round of child tax credit payments totaled approximately $15 billion, going to around 35 million families, the agency said.
