Americans may lose $20,000 in retirement savings, and face issues getting their Social Security checks if the debt ceiling isn’t raised soon, a recent Democratic report found.
A default could lead to a market decline, and as such, workers would see a drop in their retirement accounts, according to the Joint Economic Committee Democrats. Without a fix, Social Security beneficiaries could also be in danger as the government would not be able to meet “existing obligations.”
The report blamed the potential losses on Republicans and their alleged default crisis.
“The debt ceiling is not a bargaining chip, and Republican plans to prioritize some payments over others amount to, in the words of Treasury Secretary Janet Yellen: ‘default by another name,’” the report said. “What’s more, this brinkmanship jeopardizes the stability of U.S. and global financial markets at a time of increased global uncertainty.”
The report continued by saying Republicans did not support the Inflation Reduction Act, and now want to make “irresponsible cuts to crucial funding and put vital programs at risk.”
The committee cited centrist think tank Third Way, which released a report in December stating a typical worker could lose $20,000 in 401(k) assets if the country were to default on its debt. Americans could also spend $130,000 more on 30-year mortgages and find difficulty in taking loans for education or small businesses, Third Way reported.
If the debt ceiling is reached, the government would have to rely heavily on existing funds and tax revenue to pay for programs such as Social Security, Medicare and Medicaid and veteran’s benefits, the Democrats said.
Some Republicans pushed back. Arizona Rep. David Schweikert, incoming vice chairman for the Joint Economic Committee Republicans, issued a statement claiming Democrats have created “record-high inflation due to President Biden and Congressional Democrats’ reckless spending habits,” which has made buying homes and cars or paying off credit card more difficult. “In their report, Democrats focused on the impact of rising interest rates on Americans but failed to take any responsibility for the rise in inflation and long-term interest rates that are a result of their wasteful spending,” he said.