Failure to raise debt ceiling could hit home in Colorado

WASHINGTON – Government programs that hundreds of thousands of Coloradans rely upon likely will be halted or reduced if Congress fails to raise the legal amount of money the U.S. is allowed to borrow by Aug. 2.

The precise local, national and global impact of the debt showdown is uncertain, and there are a number of possible scenarios that could play out. However, if on Aug. 3 the limit has not been extended, the federal government will not have enough money to pay all its obligations, and President Barack Obama will need to decide which to pay and which not to cut – including choosing among several safety-net programs.

Between 40 and 45 percent of the payments the Treasury Department makes in a month would need to be cut if the U.S. defaults, according to an analysis by the Bipartisan Policy Center.

That means that Social Security checks may not go out. Medicare, Medicaid and unemployment benefits may be halted. Military service members and veterans may not receive their salaries. And a number of other government programs may be disrupted.

Such cuts in benefits could have a deep impact in Colorado, which receives tens of billions of dollars in retirement, disability, Medicare and other federal payments, according to a county-by-county report issued by U.S. Sen. Michael Bennet, D-Colo., on Tuesday. Colorado received about $47 billion in federal money in 2009, according to the report, which used data from the U.S. Census Bureau.

Tension is mounting as Republicans and Democrats clash over the details of that plan, and some House Republicans are arguing that default would not be as dire as many predict and raising the debt ceiling without a serious plan to address spending would be worse.

The disruption in even just one service could affect tens of thousands of people in La Plata and Montezuma counties alone. For example, there were about 13,000 Social Security beneficiaries in the two counties in 2010, according to figures from the U.S. Social Security Administration.

In addition, the federal government also contributes money in the form of grants to local communities for services such as law enforcement and transportation. Those grants also may be at risk of cuts.

“Without these resources, states and localities may be forced to raise property taxes on families, who would already be facing additional burdens as their benefits disappeared,” stated a news release from Bennet announcing his report.

Calls to Gov. John Hickenlooper’s office were not immediately returned.

The White House and Congress are working on developing a plan that would raise the debt ceiling and address the nation’s long-term budget problems.

Karen Frantz is a student at American University and an intern for The Durango Herald. Reach her at herald@durangoherald.com.

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