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Debt ceiling crisis creates uncertainty for families on federal assistance


DETROIT — Three weeks may be a lifetime for politicians in Washington, but for Americans whose livelihoods depend on the federal government, it’s an extremely short amount of time before their financial stability can be upended.

Already grappling with high inflation and rising interest rates, they are now bracing for the prospect of economic calamity if the White House and congressional Republicans fail to agree on a path to prevent US- United to default on their debt by the end of the month.

Shannon Galloway, a Gold Star mother of three biological teenagers and two adopted children, is relying solely on benefits she has received from the government since her husband died in June 2009.

Payments were delayed in December when her eldest son turned 18 and benefits were transferred to his name. Her family is expecting tens of thousands of dollars in late payments, she said, and having an indefinite delay caused by default would be “detrimental” to her family.

“I know politics can be messy,” Galloway said. “But at the same time, it’s not just politics for us. It’s our family. It is our daily life.

“I work every day, but I have no work outside the home,” she added. “So those perks are literally how we pay our mortgage, how we pay our utilities, how we pay for day-to-day living costs — gas and groceries and everything.”

Failing a deal, the Treasury Department would have to figure out how to pay tens of billions of dollars in debt and funding obligations as the government’s cash balance dwindles.

About $12 billion in military benefits are due June 1 and $25 billion in Social Security payments are due the next day, according to new analysis from the Bipartisan Policy Center, a Washington think tank. There is no precedent for the Treasury Department needing to prioritize its payments in the event of default.

Dave Allen runs a food pantry in southwest Detroit that gets about a third of its funds from a Federal Emergency Management Agency program. If FEMA money doesn’t arrive, it won’t just affect Allen. Last month alone, his pantry served 717 people, he said, or about 125 households.

His message to Washington: “It is better to solve this problem.

Otherwise, he said, “I would see a lot of hungry people with unmet needs. It’s hard to imagine. »

Treasury Secretary Janet Yellen estimated last week that the government would reach its borrowing limit on June 1 and default on the debt the United States has already incurred unless, by then, the House and the Senate pass legislation to raise the debt limit and President Joe Biden signs it into law.

Biden said Congress should raise the debt ceiling without conditions, stressing that it is the constitutional duty of lawmakers. White House officials argued Republicans would be to blame if the United States defaulted, but congressional Republicans pushed back, saying they would only agree to budget cuts in exchange for the cap being lifted. debt. House Republicans passed legislation to do just that, but congressional Democrats and the White House oppose it.

Ursel Mayo, president of Gold Star Mothers of Macomb County, lost her daughter in 2008. She made it clear that debt ceiling negotiations would lead families to the polls in the upcoming election.

“The Gold Star families want Congress to know that if you gamble with our perks, our checks, we’ll remember you at the polls in 17 months,” Mayo said. “How many lawmakers can go on forever without their checks? »

Galloway said she supports Biden but if the government defaults she will hold him accountable.

Still, she hopes it doesn’t get to that point.

“I try not to think about it too much. Because I’m like, ‘Well, it’s worked in the past,'” Galloway said. “But this one feels a little different. This one seems a bit more severe or scary.

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.