White House sounds alarm on debt ceiling fight, warns Medicaid, food stamps at risk


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Big risk for state, local officials in fight to raise debt: White House

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NS Biden The administration is warning state and local governments about drastic cuts to Medicaid, food stamps, disaster relief and other federal programs if Congress fails to raise or suspend debt limits too soon.

The fight to raise the government’s borrowing limits poses huge risks to state and local officials, white House A fact sheet obtained by the Associated Press states. With debt totaling $28.5 trillion, the government will be forced to cut federal programs unless the cap is suspended or removed.


The Treasury Department began implementing extraordinary measures to keep the government running after the nearly $22 trillion debt limit was reinstated in August – about $6 trillion less than the actual level. Treasury Secretary Janet Yellen has warned Congress that the federal government will run out of cash to pay its bills in October.

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But lawmakers are in a dangerous game over the debt cap: Democrats are pressuring Republicans to support an effort to raise or suspend the limit, adamant they see it costing $3.5 trillion. Will not put in the bill. At the same time, Senate Minority Leader Mitch McConnell has said repeatedly that he would not approve further increases, arguing that Democrats have the ability to go it alone.

“Let’s be clear: With a Democratic President, a Democratic House and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It’s their sole responsibility,” McConnell tweeted on Wednesday. “Republicans will not facilitate another reckless, partisan tax and spending spree.”

President Biden has countered that Democrats joined with three-time GOP lawmakers under the Trump administration to suspend limits, and that the growing deficit is due to Republican spending. He argued that the comprehensive tax and spending package Democrats are still crafting would be fully paid for.

“Let me remind you, these are the same people who just cut Trump’s tax four years ago,” Biden said at the White House on Thursday. “It just increases the federal deficit.”

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If the US fails to raise or suspend the debt limit, it will eventually have to temporarily default on some of its obligations, which could have serious and negative economic effects. Interest rates are likely to rise, and demand for treasuries will decline; Even the risk of default can drive up the cost of borrowing.

The White House fact sheet suggests that the economic pain the states will be inflicted, as so many aid programs rely on federal funding: The government’s ability to respond to natural disasters such as hurricanes, earthquakes or wildfires will be hampered. States will also face a Medicaid shortfall because the federal government covers two-thirds of the cost. a

The memorandum suggests that breaching the debt limit would threaten about $100 billion in infrastructure grants for highways, airports and public transport.

Another $50 billion for special education, school districts serving poor students and other programs would also be at risk, such as $30 billion in food aid and $10 billion for public health.

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