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White House warns that debt ceiling performance could hurt states – Times of India

NS white House is warning state and local governments about drastic cuts in disaster relief, Medicaid, infrastructure grants. School money and other programs if Congress fails to raise the US debt limit.
A fact sheet for state and local officials that was obtained by the Associated Press is an attempt to ease public pressure. managing committee republican leader Mitch McConnell. President Joe Biden He has so far insisted on bipartisan support to raise the cap on loans that were almost entirely accrued before he took office, but McConnell, R-Ky., has stood firm and has repeatedly said that Democrats must act on their own.
The Treasury Department has engaged in extraordinary measures to keep the government running after reinstating the suspended debt limit to a level of $22 trillion in August, about $6 trillion less than the current total debt load. The Treasury’s extraordinary measures would expire by October, creating the potential for default.
The debt limit is the amount Congress allows the Treasury to borrow to keep the government running.
It was suspended three times during trump administration and has been lifted dozens of times since 1960. Created at the start of World War I, Congress would no longer be required to approve each bond issuance, the debt limit has evolved into a political weapon as lending has grown exponentially over the past two decades. .
With debt totaling $28.4 trillion, the government will be forced to cut programs deeply until restrictions on borrowing are lifted or suspended. The risk of financial market downturns and turmoil will make it harder for states and cities to borrow, while also playing with public pension investments.
The Biden administration’s fact sheet makes the case that the pain would spread between states because many programs depend on federal dollars. The government’s ability to respond to natural disasters such as hurricanes, earthquakes or wildfires will be reduced.
States will face severe Medicaid shortfalls because the federal government covers two-thirds of the costs. About 20% of Americans get their health insurance through Medicaid and the Children’s Health Insurance Program.
Roughly $100 billion in infrastructure grants for highways, airports and public transportation would be at risk. More than $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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