The Trump Administration’s proposed $4.1 trillion budget has lawmakers scrambling to raise the debt ceiling with major cuts to discretionary funding. Will the United States go into default for the first time ever?
JACKSONVILLE, Fla.—Lawmakers in Washington are in limbo amid a possible government shutdown due to the almost over-capacity debt ceiling.
Raising the borrowing limit is top priority in Capitol Hill and Treasury Secretary Steven Mnuchin says it should be voted on before congress leaves for recess in August. The budget plan by President Trump has been deemed a bust across party lines.
The Trump Administration $4.1 trillion budget plan calls for various discretionary cuts to fund a $54 billion defense increase to $603 billion, with major cuts to the Department of Agriculture, Labor, and State. The White House is also looking to nearly eliminate funding for Medicaid, food stamps and the Environmental Protection Agency. The budget however, does include a new paid family leave where new mothers and fathers have 6 weeks paid to bond with their new child and/or adoptive child.
If Congress votes in favor on raising the debt limit cap, the US will have it’s first-ever default on obligations. Many supporters of the proposed budget are in favor of increased defense spending, but leery of the domestic budget cuts required.
If defaulted, the value of the US dollar will drop, interest rates on consumer loans, mortgages and state and local government will rise. Federal employees are also subject to not being paid salaries for federal and military personnel. Social Security, Medicaid and Medicare would stop, and student loans would not be paid out.
SOURCE: THE ASSOCIATED PRESS