U.S. default would trickle down on states | Arkansas Blog

Friday, July 22, 2011

U.S. default would trickle down on states

Posted By on Fri, Jul 22, 2011 at 6:35 AM

It should be self-evident, but it's probably worth thinking about the many ways state governments will be wrecked if Congress doesn't raise the debt limit and the U.S. begins defaulting on payment obligations.

Medicaid? Tuition? Social Security checks? In addition to direct payments to states, the money that will be withheld normally is put straight back into commerce as spending that generates state tax revenue. Catastrophic is what it would be.

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