What a U.S. debt default could mean for thousands of families in Virginia

Published: May. 18, 2023 at 7:12 PM EDT
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ROANOKE, Va. (WDBJ) - Lawmakers are rushing to strike a deal to raise the U.S. debt ceiling before June 1 when the government is set to default.

If the U.S. defaults on its debt, economic experts say that would affect people who receive social security payments, SNAP benefits or any other type of government assistance program.

If a deal is made to raise the debt limit, public benefits experts are concerned about what programs could see cuts.

The U.S. raised the debt limit multiple times in the last ten years, up to $31.4 trillion. But Virginia Tech’s associate professor of public policy, David Bieri, explained high inflation and high interest rates make the current situation more drastic.

“If there is chaos in international financial markets, if the U.S. doesn’t service its debt, then we might have a worsening of the economic conditions here at home,” Bieri said.

House Republicans want less spending on welfare programs, but Democrats are pushing back.

“America is spending above its means, it’s not taking in enough money by tax revenues,” Bieri said. “Some of these spending cuts are part of the conditions that are being negotiated right now.”

Cassie Edner, a public benefits attorney with Virginia Poverty Law Center, explained changing Medicaid work requirements to limit spending could impact thousands of Virginia families.

“We’re hoping that we don’t see these cuts,” Edner said. “Work requirements and time limits are really detrimental to Virginians.”

Edner explained spending cuts could also create a backlog in social security offices.

“You’re probably going to see fewer hours at social security, fewer people working at social security, maybe office closures,” Edner said.

Both Edner and Bieri explained the U.S. debt ceiling is an economic crisis and one that shouldn’t be ignored.

During media availability with reporters Thursday, US Senator Tim Kaine (D-VA) explained there is optimism from Republicans and Democrats about reaching an agreement.

”President Biden, Senator Schumer, Senator McConnell and Democratic Leader Jeffrey are all saying there will be no default, and then you have the fifth, Speaker McCarthy, saying we’re really making progress and we think we can do a bill next week,” Senator Kaine said. “That should maybe reduce the anxiety level a little bit, but we’re not there yet and we have work to do.”

Republican House Speaker Kevin McCarthy said a bill could be made by next week ahead of the default deadline.