![]() Given current appropriations laws, Edelberg points out, government workers would have to show up for their jobs, but they may not get their paychecks in full, on time, or both.Īs with Social Security benefits, the government would catch up on the back pay once spending limits were increased, but there’s no telling how long that process would take. Government Workers Could Stop Receiving PaychecksĪnother dire outcome of a spending limit impasse would be that government workers would not get paid-but they would still be expected to work. Once the spending limit is raised, beneficiaries will receive any delayed payments, but in the meantime, a debt standoff poses a significant risk to their monthly income and well-being. “Just as if you have a mortgage payment and a car payment, you will move heaven and earth to pay that first and put off paying off other debts, like credit cards or a loan from your brother.” “If indeed the debt ceiling bind continues, my guess is that they will prioritize paying interest on the debt and put off paying Social Security,” Edelberg says. Some 70 million Social Security recipients would likely be among the first to feel the brunt of the Treasury running out of money, says Wendy Edelberg, director of The Hamilton Project at the Brookings Institution. Social Security Benefits Could Be Withheld Additional, less direct impacts on everyday Americans may follow, such as a spike in interest rates. If the debt ceiling isn’t raised in time, some consumers and workers could be hurt almost immediately as the government may be forced to curtail benefits and paychecks. 4 Ways a Debt Ceiling Breach Can Hurt Consumers “If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” she adds. The secretary says a default on the nation’s debt would bring undue misery to the country. “Our best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time,” Yellen says, in a May 1 letter to House and Senate leaders. will hit its debt ceiling within weeks and not have the cash to pay its bills. Rakbank recovers around a quarter of the debt that goes unpaid as a result of one of the customers leaving the country, Martin said.Treasury Secretary Janet Yellen has rung a warning bell about the American economy, telling Congress the U.S. "We could see a resurgence of this at the end of June," he said. Thousands of expatriates have lost their jobs in the Gulf trade and tourism hub of Dubai since the financial crisis triggered a real estate crash late last year that ended a six-year economic boom.Īlthough growth in the number of skips has begun to level off in the past two months, Martin said, banks in the UAE could face a new wave of customers leaving with their debts unpaid as expats who have lost their jobs may wait until the end of the school year to leave. ![]() We don't see a lot of skips in Abu Dhabi or Sharjah." "Most of the skips are connected to the construction industry in Dubai. "The instances of skips in our bank, according to our own intelligence, is 50 per cent below our competitors," he said. Rakbank, which has around 20 per cent market share in the country's credit card sector with around 300,000 customers, has seen around half that rate in the same period, Martin said. ![]() Martin said the bank's research indicated banks in the UAE have had 1,500-2,500 customers leave every month over the past six months without paying what they owe on credit cards. "On our credit card portfolio, in common with other banks, we are seeing increasing numbers of 'skips' - that's people leaving the country without paying their bills," Martin said. Rakbank business advisor David Martin said most of those leaving without settling their credit card bills were linked to the construction sector in Dubai. Dubai: Some UAE banks are seeing up to 2,500 customers leave the country every month without paying off their credit card bills, a number that could rise in June, a senior Rakbank official said on Sunday.
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