The Debt Limit Standoff Could Harm Millions of Americans
After the U.S. hit its debt limit in mid-January 2023, Treasury Secretary Janet Yellen warned of “‘catastrophic’” economic consequences that could harm “‘millions Of Americans,’” including military servicemembers and seniors.
Once the Treasury Department exhausts its extraordinary measures to avoid default, economic harm could “quickly mount” and trigger a recession, freeze credit markets, and potentially force millions of American workers—who enjoyed a 50-year low unemployment rate as of January 2023—into joblessness, all while federal response efforts would be ”immobilized.”
Interrupted federal payments—even if they are only delayed amid Treasury efforts to avoid full default—could harm tens of millions of Americans who rely on Social Security, Medicare, Medicaid, veterans care, low-income food and housing assistance, mail, national security, and other critical services:
- Social Security: Interrupted payments could harm nearly 66 million Social Security Beneficiaries, who on average rely on the program for over half of their household income, millions of whom rely on the program as their “sole means of support,” and many of whom rely on other forms of federal assistance.
- Medical Assistance: Interrupted payments could hinder medical care for tens of millions of Americans, including over 60 million on Medicare, 75 million on Medicaid, over 9 million veterans, and nearly 7 million children in the Children’s Health Insurance Program.
- Food Assistance: Interrupted payments could constrain food access for tens of millions of Americans, including 42 million Americans in the Supplemental Nutrition Assistance Program (SNAP) and 30 million children benefiting from the Federal School Lunch Program.
- National Security: Interrupted payments could undermine national security, potentially affecting the salaries of about 1.4 million active-duty personnel and other military spending, including equipment maintenance and procurement, counter-terrorism, and intelligence measures.
- Other Critical Federal Services: A debt standoff could interrupt “critical day-to-day services,” including mail and air traffic control, and about 4.3 million federal workers could face uncertainty over their paychecks.
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