“It would be catastrophic for the economy and for individual families,” Yellen said at a House Financial Services Committee hearing.
“Nearly 50 million seniors could stop receiving Social Security benefits or receive them delayed,” Yellen said, echoing what she wrote in a statement. Wall Street Journal opinion piece
earlier this month. “Our troops wouldn’t know when they would get their next paycheck. We have 30 million families depending on the monthly child tax credits and they wouldn’t get that exemption, at least not on time.”
Unless Congress de debt limit before October 18
, the federal government will no longer be able to borrow to pay for its operations, forcing it to limit its spending. Although the House has taken measures twice
to do so, the attempt is expected to fail again in the Senate, where Republicans are united in their opposition to the bill.
Exactly what it would mean for Americans remains uncertain, as Congress has historically intervened to raise, expand or revise the definition of the debt limit. The Treasury Department could still pay some of its bills as it would still have tax revenues, but it’s unknown what it would decide to pay and when, experts said.
Social Security beneficiaries would risk not receiving their payments for the first time since the program was created in 1935, said Max Richtman, CEO of the National Committee for the Preservation of Social Security and Medicare. They are expected to receive $90 billion in payments in October.
About 40% of beneficiaries depend on the monthly checks for at least 90% of their income, and two-thirds of recipients depend on the infusions for at least half of their income, he said.
“Not having a check for a few weeks or a month is devastating,” Richtman said. “Beneficiaries will have to decide: Do I pay my rent? Do I buy food? Do I buy my medicines?”
Also, millions of parents who still have three monthly installments of the improved children’s discount
this year may also have to wait for the funds if there is a default.
The Internal Revenue Service is expected to send out about $15 billion in payments on the 15th of each month, and many families depend on the money to buy food and necessary items
for their children. Parents receive up to $300 for each child up to age 6 and up to $250 for each child age 6 to 17.
Meanwhile, more than 42.3 million Americans who receive food stamps can wait for their monthly benefits — an average of $227 per person.
A standard and prolonged deadlock could also have: big implications
for the national economy, with federal austerity measures that Moody’s Analytics says could cause a downturn similar to the Great Recession. Nearly 6 million jobs could be lost, stock prices could fall by a third, and about $15 trillion in household wealth could evaporate.
CNN’s Matt Egan contributed to this report.