Which states would suffer most if the US defaults on its debt ceiling?
The US is on the brink of default if the debt ceiling is not raised. Economic disaster may come to pass, with some states suffering more than others.
The Biden government and Congress continue to be at an impasse regarding lifting the debt ceiling, and unless the situation is resolved, the US could default on its debt as early as June 1, which would spell disaster for the economy.
Economists have been making predictions about how a default or even a breach of the ceiling could affect the country. If the US ends up with a full-fledged default, it will have an impact on people who receive government funding, including those who are sent food aid and Social Security payments.
Which states would suffer most if the US breaches its debt ceiling?
Most of the country would be affected by a breach of the debt ceiling, but the economic damage would be felt differently across states, according to projections released by Moody’s Analytics last week. It would be felt most severely by states where there are significant numbers of government workers, including the nation’s capital, Washington DC, where one out of four workers are employed in government jobs.
A breach would also affect states with facilities that are dependent on public funds like Alaska, Hawaii, and New Mexico, where there are national laboratories or military installations.
Other areas that rely on government spending and aerospace such as Northern Virginia, Connecticut, Kansas, and Washington are also vulnerable.
Moody’s also projects that the states of Florida, Ohio, and Pennsylvania would in all likelihood each lose hundreds of thousands of jobs if the breach is to last for a few months.
Breach vs Default
According to CNN, Moody’s Analytics chief economist Mark Zandi explains that a breach is not the same as a default. Zandi says a breach would take place if the Treasury Department is unable to make a payment to any creditor on time, such as Social Security checks or electric bills for government buildings, per CNN. A default, on the other hand, would mean that the Treasury was unable to make a debt payment by the deadline.