The United States could default on its debt in less than two weeks, and cities with a large military presence risk an economic firestorm if lawmakers don't act, according to a recent CNN report.
"A default would mean the government won't be able to meet all of its financial obligations, which include salaries paid to federal workers and payments to Social Security recipients," said the report.
About a sixth of U.S. government spending goes toward national defense, a quarter of which is to pay military personnel, the report said, citing the Congressional Budget Office.
"If the United States can't pay its national defense bills, cities with large military bases face a potentially massive fallout, encompassing missed payments, rising debt and a significant pullback in spending that would cut into local businesses' bottom lines," it noted.
It remains unclear what payments the Treasury Department would prioritize or how it would service the government's debts once it runs out of cash, it said.
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- US President Joe Biden said that talks with US House Speaker Kevin McCarthy on raising the national debt ceiling were productive, with discussions to continue despite ‘areas of disagreement’.
"I just concluded a productive meeting with [House] Speaker [Kevin] McCarthy about the need to prevent default and avoid a catastrophe for our economy. We reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement," the US president said in a statement.
Biden pointed out that "while there are areas of disagreement, the Speaker and I, and his lead negotiators Chairman McHenry and Congressman Graves, and our staffs will continue to discuss the path forward."
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President Joe Biden and House Speaker Kevin McCarthy could not reach an agreement Monday on how to raise the U.S. government's $31.4 trillion debt ceiling with just 10 days before a possible default that could sink the U.S. economy, but vowed to keep talking.
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