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Here’s how Medicaid, food stamps run out of money immediately if Congress doesn’t raise debt limit

Several essential federal safety net programs like food stamps and Medicaid will lose funding if the U.S. debt ceiling is not raised. That was the warning message from the White House as debate continued about the future of a spending plan.

President Joe Biden has called for the debt limit to be increased, but Republicans have brushed back that idea — indicating that they will stand firm, preventing legislation from going through that would raise it.

This creates a situation where Democrats would need to act without Republican support — something that’s easier said than done. Meanwhile, if the debt limit is not increased — $30 billion allotted for food stamps and $10 billion for Medicaid would be jeopardized.

The federal government finances two-thirds of Medicaid costs. This would put the total cost of Medicaid on states. Since most states do not have the funding to make the program whole — approximately 20% of Americans who get health insurance through Medicaid and the Children’s Health Insurance Program would cease.

Disaster relief, school funding, and infrastructure grants would also be up in the air.

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What is the debt ceiling? Why does it matter?

In simple terms, it’s the amount of money that the U.S. Treasury Department is permitted to borrow. 

“Let’s be clear: With a Democratic President, a Democratic House, and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It is their sole responsibility,” Senate Minority Leader Mitch McConnell tweeted. “Republicans will not facilitate another reckless, partisan taxing and spending spree.”

President Biden argued that Democrats joined with Republicans three times during the Trump Administration to raise the debt limit. He’s also argued that the spending package will be fully-paid for when all is said and done.

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What happens if the debt limit isn’t lifted?

On a temporary basis the U.S. would have to default on some of its obligations. That could have serious, long-term implications on the economy. Interest rates would likely have to increase, and it could cause the global status of the U.S. economy to suffer, too.

The biggest challenge would be to social safety nets — like Medicaid and food stamps. If these programs run short on funding — and states don’t have reserves to cover the minimums — then programs would immediately begin slowing disbursement. 

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