Consumer Alert: Here’s how the nation’s debt default could affect your family
ROCHESTER, N.Y. – This consumer alert takes a look at how defaulting on the nation’s debt could affect each of us. Republican and Democrat negotiators met again Tuesday and there is still no agreement. A possible default is now only nine days away, and the effect on all of us could be devastating.
Devastating, catastrophic, calamitous are the words being used by economists, and they are not the kind of folks who are prone to hyperbole. Goldman Sachs estimates that 10 percent of economic activity will immediately stop, and that would likely trigger a recession that would send the unemployment rate from 3.4 percent to 5 percent. And federal benefits are under threat if the country can’t pay its bills.
Let’s look at the effect on three hypothetical families. First consider a couple both in their 70’s. These estimates of their federal data from 2021. That means the numbers are slightly higher now. This couple receives on average $3,197 bucks in social security every month. And the federal government is funding their Medicare coverage to the tune of $1,635. That’s $4,832 a month in federal benefits, and that doesn’t count other benefits they may qualify for like housing assistance.
Now let’s look at the benefits for a 35-year-old disabled veteran who is taking college courses. His veteran benefits are $1,428 a month. He gets $1,740 in education assistance, which together comes to $3,168 a month.
And this next example could be almost any Rochester family. It’s a young married couple with two kids and a household income of $40K. This family is getting energy assistance, which is $440 a month, Special Supplemental Nutrition Program for Women, Infants, and Children, or WIC which is $40, for a total of $440 monthly. And again, this family qualifies for federal housing assistance. These estimates don’t include that.
Most devastating would be the devaluation of the dollar and treasury securities. That would affect every aspect of our economy, from our retirement accounts to skyrocketing interest rates. If the U.S. defaults, we all lose, no matter which side of the political aisle you happen to sit. These two sides must reach an agreement because default is simply not an option.