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Lack of Federal Debt Deal Worries White Plains

WHITE PLAINS, N.Y. - While Democrats and Republicans continue to engage in a stand-off in the face of the Tuesday deadline for raising the debt ceiling, local officials, including White Plains Mayor Thomas Roach, say if an agreement isn’t reached by then, it could mean some dire consequences for local governments and their constituents.

"The ramifications are severe for whatever the government does in Washington. Whether they default or whether Social Security is slashed, it's going to affect people, not just federal services," said Roach.

Roach said federal funding was woven too intimately into local projects and services to say what might might be in jeopardy in White Plains. However, he noted that the uncertainty surrounding the debt deal was straining local markets.

"It's hard to know what they would cut back on first," said Roach. "Local governments, those of us on the ground, are the ones that have to have balanced budgets every year. So the cuts will be another hurdle. But whatever happens, we'll make it work."

While it’s been widely reported that if Tuesday’s deadline isn’t met, the government will “default,” that’s technically not true, officials say. Default happens when interest on loans is not paid, however, officials say there will be enough money from tax revenue to cover those payments.

“I agree that the definition of ‘default’ is more technically detailed than used in common parlance,” said Congresswoman Nan Hayworth (R – Mount Kisco) , of New York’s 19th District. “The treasury will still be able to pay our sovereign debt obligations.”

That, Hayworth, said includes treasury bonds, Social Security, and Medicare. “Those debt obligations will be taken care of,” she said. Hayworth also noted that while everyone is focused on the Tuesday deadline, she said “knowledgeable observers” say it could be a few days longer before the impact of the failure to raise the debt ceiling is felt.

“It could be a few more days (past Aug. 2),” she said.

However, if those days do pass without any resolution, Hayworth said the local governments and organizations in Westchester County will most likely feel the pinch with things such as Community Development Block Grants. She said the treasury department would have to prioritize its payments and items such as Social Security, Medicaid and military paychecks would likely be at the top of the list, not grants.

“Some might have to give an IOU to their local contractors if they’re willing to take one,” she said.

Congresswoman Nita Lowey (D - Harrison) , of New York’s 18th District said in addition to a possible delay in Social Security benefits and other services, failure to raise the debt ceiling could result in

higher interest rates that could impact the cost of mortgages and credit card payments.

“Families could lose thousands of dollars from retirement savings and investments,” she said. “It is clear that Congress and the president must agree to a plan that ends the default crisis and includesresponsible spending reductions that do not balance the budget on the backs of the most vulnerable Americans.”

New York State Senator Greg Ball (R, C – Patterson) said the fallout would be especially trying for the state because he feels New York does not rebound quickly from fiscal crisis.

“Historically, New York State takes twice as long to recover from an economic downturn,” he said. “So, any recovery caused by this would be doubly hard. It would go beyond lost grant money. It would cause a problem balancing the state budget. It’s odd that Washington is making Albany look good right now. But all I can say is this would be devastating at both the state and local level.”

Are you concerned about how a delay in establishing a debt deal could affect White Plains? Are there any project or services that receive federal funding that you're worried about? Email thoughts to and we'll include your responses in future coverage.

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