🔴 Talks are ongoing about the raising the federal debt ceiling

🔴 The U.S. could default as soon as June 1

🔴 A default would likely delay all federal payments, according to Sen. Jeanne Shaheen

If a deal cannot be reached on the federal debt ceiling, there would be major impacts for the Seacoast including payment to federal employees at the Portsmouth Naval Shipyard and the Pease Tradeport, according to Senator Jeanne Shaheen.

President Joe Biden and House Speaker Kevin McCarthy are meeting daily to reach an agreement. If their standoff continues, the U.S. will run out of cash to pay its bills and default on its debts possibly as soon as June 1, according to Treasury Secretary Janet Yellen. Such an unprecedented event is predicted to create economic shockwaves worldwide.

During the first of several virtual meetings on Tuesday, Shaheen warned that federal programs would be impacted.

"At the local level, local programs that deliver Granite Staters healthcare, substance abuse care, environmental efforts, and more would be directly impacted. We’d likely see a federal clawback of public safety grants, tax credits, and more. This is unacceptable. Granite Staters should not bear the burden of a manufactured crisis created by Republicans in Washington," Shaheen said.

Portsmouth Mayor Deaglan McEachern during a call about the debt ceiling 5/23/23
Portsmouth Mayor Deaglan McEachern during a call about the debt ceiling 5/23/23 (YouTube via Sen. Jeanne Shaheen)

Portsmouth Mayor Deaglan McEachern asked about the impact of a default on the Portsmouth Naval Shipyard and the Pease Tradeport, including delays for pay for workers.

"As I understand, the initial response to a failure to raise the debt ceiling would be to delay federal obligations like federal payments. The longer that goes on, the more problematic that becomes," Shaheen said.

Will Garrity Binger, Shaheen's economic policy staffer, said that the Treasury Department would likely have to delay payments on anything it pays out, including military employees and contractors.

"We don't think they would prioritize certain payments to employees versus contractors," Binger said. "There's still some questions as to how this would work.The most likely thing is that yes, payments would be delayed and would get paid in the order that they were set to be made originally."

Shaheen said that revenue is due to come in mid-June, which would also impact the Treasury Department's ability to make payments. The senator said a plan was developed in 2011 in the face of a default during the Obama Administration, but she was not sure if those plans would be followed.

Sen. Jeanne Shaheen during a call about the debt ceiling 5/23/23
Sen. Jeanne Shaheen during a call about the debt ceiling 5/23/23 (YouTube via Sen. Jeanne Shaheen)

Neither political party is blameless for the standoff over raising the debt limit. Both Democrats and Republicans have dug in on raising the debt ceiling. GOP House Speaker Kevin McCarthy wants cuts to programs that assist the poor. President Biden has agreed to some cuts, but also wants to hike taxes on the richest taxpayers.

Shaheen said that the parties have reached a compromise over 60 times in the past to avoid default, including three times during the Trump administration.

"This should not be a drawn out, needlessly politicized process, especially when we know those who will pay the steepest price are the American people; seniors who won’t get Social Security checks, small businesses who will face another economic crisis on the heels of the financial struggles of the pandemic, and so much more," Shaheen said.

The senator said federal funding makes up approximately 33 percent of New Hampshire’s state budget.

Margaret Byrnes, Executive Director of the NH Municipal Association, said that cuts that impact the ability of local governments to provide services to residents and disproportionately affect our most vulnerable populations are not in our collective best interest.

“The proposed cuts and claw backs would jeopardize a staggering number of programs and services—at both the state and local level—ranging from public safety, infrastructure, and clean water to health care, food assistance, and homelessness,” Byrnes said.

Contact reporter Dan Alexander at Dan.Alexander@townsquaremedia.com or via Twitter @DanAlexanderNH

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