The US Treasury has said extraordinary measures to avoid default will run out by October.
The memo outlines several key programs that would be halted if Congress fails to increase the debt limit, including disaster relief efforts, Medicaid and the Children’s Health Insurance Program, infrastructure funding, education, public health and child nutrition.
The memo also warned that “hitting the debt ceiling could cause a recession,” suggesting, “Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs.”
“If the U.S. defaults on its debt — cities and states could experience a double-whammy: falling revenues and no federal aid as long as Congress refuses to raise or suspend the debt limit. This means critical state services will be at risk for budget cuts, from education to healthcare to pensions,” the White House said.
It also warns that capital market volatility “could affect state assets,” which could impact state pension payout obligations.
The White House expressed confidence the matter would get resolved, but declined to say how.
“We have seen this done in a bipartisan way consistently. And the best way to do this is without a lot of drama, without a lot of self-inflicted harm to the economy and to our country. And that’s what we’re going to do, you know, there’s a lot of posturing on this issue, but we’re confident at the end of the day we’ll get this done,” National Economic Council director Brian Deese said Friday on MSNBC.
CNN’s Manu Raju contributed to this report.